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Carlisle posts loss, shares slide. "Raw materials comprise more than 70 percent of our cost of goods sold and these cost increases negatively impacted nearly all of our businesses," CEO David Roberts said in a statement. The company posted a net loss of $62.6 million, or $1.02 a share, compared with net income of $36.8 million, or 59 cents a share, in the year-ago period. Loss from continuing operations was $1.01 a share and included an impairment charge of $1.46 a share related to its power transmission belt business and on-highway brake business, which the company is selling off. Analysts on average were expecting earnings of 56 cents a share, before items, according to Reuters Estimates. Revenue rose 13 percent to $708.3 million, coming below analysts' expectation of $711.7 million. Higher freight costs, reduced factory utilization on lower outdoor power equipment production and inefficiencies in certain tire and wheel plants also hurt the company's quarterly operating income. The company, which has two tire plants and a wheel plant, said costs for all key raw materials -- particularly steel, natural and synthetic rubber and carbon black used by the transportation products segment -- have gone up. Carlisle, whose products include commercial roofing and heavy-duty brake and friction, said it will continue to face margin pressure throughout 2008, but expects earnings growth in the second half of the year. Shares of the Charlotte, North Carolina-based company fell to $29.95, before recovering some losses to trade at $30.70 in afternoon trade on the New York Stock Exchange. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Amitha Rajan)

UAW threatens GM strike at Ohio stamping plant. GM, the No. 1 U.S. automaker, has idled about 30 plants due to parts shortages from a UAW strike at a key supplier, and UAW strikes and threats of strikes at GM plants where local agreements have yet to be completed following a master contract the union and GM negotiated last year. A UAW local representing workers at a GM stamping plant in Mansfield, Ohio, has given GM notice of a strike deadline next week, GM spokesman Dan Flores said on Tuesday. That notice comes just days before UAW workers at GM's Fairfax, Kansas, assembly plant could strike in a walkout that would disrupt production of the hot-selling Chevrolet Malibu, a sedan seen as crucial to the automaker's lineup. UAW Local 31 in Kansas could strike as early as 3:30 pm CT/4:30 pm ET Thursday, President Jeff Manning said. GM and the local remain in daily negotiations, he said. The Fairfax plant is the primary site for production of the newly redesigned Malibu that GM has targeted as a competitor to the Toyota ( 7203.T ) Camry and Honda ( 7267.T ) Accord sedans. GM also builds the Saturn Aura sedan at the plant. GM also produces the Malibu at its Orion assembly plant in Michigan, where it builds the Pontiac G6. The UAW has already reached a local agreement with GM at the Orion facility. About 3,650 UAW-represented workers went on strike February 26 at five American Axle & Manufacturing Holdings Inc ( AXL.N ) plants in the United States. The strike quickly forced GM to cut production due to parts shortages. The production disruptions mainly had affected GM's production of large sport-utility vehicles and pickup trucks that have been selling slowly because of the U.S. economic downturn and high fuel prices. However, more recent strikes and threats of stoppages have affected GM vehicles that have continued to sell well in the downturn: crossover SUVs built on car platforms that are more nimble than traditional SUVs built on truck platforms. UAW workers went on strike Thursday at the Delta Township plant near Lansing, Michigan, idling production of the Buick Enclave, Saturn Outlook and GMC Acadia crossovers. A local representing workers at a metal fabricating plant in Grand Rapids, Michigan, could strike GM as early as Friday, while a UAW local representing workers at a GM transmission plant in Warren, Michigan, has negotiated beyond a deadline. GM also said on Tuesday that workers at its Hamtramck, Michigan, assembly plant have been told they will return to work on Monday. The plant, which employs about 1,850 hourly workers, makes the Cadillac DTS and Buick Lucerne luxury cars. (Reporting by David Bailey , Ben Klayman and Soyoung Kim )

Dow, S&P dip on bank worries, Texas Instruments off. After the Dow closed out its strongest week in two months on Friday, blue chips retreated on news of a 77 percent tumble in first-quarter profit from Bank of America. An index of financial stocks fell 1.7 percent, giving back gains made on Friday when Citigroup stoked optimism that the banking sector was taking steps to work its way through the credit crunch. Making matters worse, National City Corp highlighted the sector's difficulties when the regional bank was forced to raise additional capital at the expense of its existing shareholders. Its shares sank 27.6 percent to $6.03. "People think the profitability prospects for banks are significantly damaged," said Stephen Massocca, co-chief executive at San Francisco-based investment bank Pacific Growth Equities. "I don't see nor do I anticipate that the bank capital raises are over." Nasdaq managed to eke out a small gain, however, after Citigroup raised its earnings estimate on Apple Inc two days ahead of the iPod maker's quarterly earnings report. Apple's stock climbed 4.4 percent. In addition to technology, energy was another pocket of strength after oil prices shot to their latest record high above $117 a barrel on supply worries. Shares of oil services company Schlumberger rose 5 percent to $106.91. The Dow Jones industrial average fell 24.34 points, or 0.19 percent, to 12,825.02. The Standard & Poor's 500 Index slipped 2.16 points, or 0.16 percent, to 1,388.17. But the Nasdaq Composite Index rose 5.07 points, or 0.21 percent, to 2,408.04. Both the Dow and the S&P 500 snapped a four-day winning streak. TEXAS INSTRUMENTS SLIPS LATE After the closing bell, shares of Texas Instruments Inc dipped 1.9 percent to $30 as the maker of chips for everything from televisions to industrial products forecast second-quarter results that fell short of Wall Street's expectations. Texas Instruments closed on the New York Stock Exchange at $30.59, up 3.3 percent. During the regular session, Apple shares gained $7.12 to $168.16 on the Nasdaq. "You've had some very positive reports and some very upbeat comments," from technology companies, and Apple could add to those, said Tim Smalls, head of U.S. stock trading at brokerage firm Execution LLC in Greenwich, Connecticut. On the New York Mercantile Exchange, May crude settled at a record $117.48, up 79 cents, after hitting an intraday record high of $117.76. Shares of Hess Corp rose 7 percent to $112.56. Bank of America Chief Executive Kenneth Lewis said credit market problems were not over and the effects of the housing slump may take at least the rest of 2008 to work out. Shares of the No. 2 U.S. bank fell 2.5 percent to $37.61. Shares of National City, a large U.S. Midwest regional bank, posted a quarterly loss and slashed its dividend. The bank also said it is raising $7 billion by selling shares as it wrestled with the impact of the housing market downturn. Investors worried that banks could be in for a prolonged period of dreary earnings as fallout from the housing slump and credit market turmoil takes its toll and concerns persist about the economy's health. Shares of Citigroup Inc dipped 0.3 percent to $25.03 on the New York Stock Exchange after Meredith Whitney, an influential bank analyst at Oppenheimer & Co, forecast a wider 2008 loss for the largest U.S. bank. On Friday, Citigroup reported a $5.11 billion first-quarter loss. Yet its stock rose with the rest of the market, which rallied and gave the Dow its best week since February. In other earnings news, Eli Lilly and Co posted lower-than-expected quarterly earnings, due to disappointing sales of its diabetes drug, Byetta. Its shares tumbled 4.8 percent to $49.59 on the NYSE. Shares of Sears Holdings Corp slumped 6.9 percent to $97.48 on Nasdaq after the retailer announced late Friday it had been advised that its secured credit facility with Bank of America will end in July. Trading was low on the NYSE, with about 1.12 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion. On Nasdaq, about 1.65 billion shares traded, below last year's daily average of 2.17 billion. Declining stocks outnumbered advancing ones on the NYSE by a ratio of 9 to 7 and on the Nasdaq by 4 to 3. (Additional reporting by Ellis Mnyandu ; Editing by Jan Paschal )

Broadcom beats revenue view, sees growth continuing. Its shares rose 9 percent in late trading after the news as investors, investors particularly worried about enterprise spending in a weak economy, heaved a sigh of relief. Broadcom, which makes chips for mobile phones, network equipment and consumer devices said revenue rose 14.5 percent to $1.03 billion. This compared with its forecast for first-quarter revenue of between $975 million and $1.005 billion and average analyst estimates for $992.16 million, according to Reuters Estimates. It also forecast second quarter revenue in a range of $1.075 billion to $1.125 billion, citing strength in all of its business segments. This was above average analyst estimates for $1.027 billion in revenue, according to Reuters Estimates. Charter Equity Research analyst John Dryden said Broadcom's stronger than expected revenue was a surprise, especially as it cited strength in enterprise network equipment as this is often seen as a worrying segment in times of economic uncertainty. "Broadcom is not seeing a slowdown in the overall economy as far as it impacts their business, which is surprising as the tone of economic uncertainty hasn't improved in the last three months," said Dryden. Broadcom said its profit rose to $74.3 million, or 14 cents per share, from $61 million, or 10 cents a share, in the year-ago quarter. Excluding unusual items the company's earnings per share would have been 39 cents compared with average analyst estimates of 28 cents, according to Reuters Estimates. The company cited strong chip demand for satellite television set-top boxes and high-speed Internet modems, as well as for chips used in network equipment used by enterprises. Broadcom Chief Executive Scott McGregor said that, while he was cautious on the macroeconomic front, the company was not seeing signs of a weak economy hurting its business. "We are not currently seeing any broad-based weakness," McGregor said in a conference call with analysts. Broadcom's business segments include enterprise and broadband, which it said were both stronger than expected in the quarter, as well as wireless, including cell phone chips. McGregor said in a statement that its second-quarter outlook represents solid revenue growth in each of its three major target markets. The report follows a disappointing outlook for the current quarter from bigger wireless chip rival Texas Instruments TXN.N. Earlier on Tuesday Broadcom said it agreed to pay $12 million to settle U.S. Securities and Exchange Commission charges that it fraudulently backdated stock options. Broadcom shares rose to $25.70 in after hours trading after closing down 1 percent at $23.55 in regular Nasdaq trading. (Reporting by Sinead Carew; Editing by Andre Grenon )

Boeing CEO admits 787 Dreamliner errors. The admission is the clearest indication yet that Boeing's revolutionary plan to parcel out production of most of the carbon-composite aircraft to suppliers around the world has aggravated problems on the program, which is now running 15 months behind schedule. "The global-partnership model of the 787 remains a fundamentally sound strategy," said Boeing CEO Jim McNerney in a memo circulated to employees on Monday. "But we may have gone a little too far, too fast in a couple of areas. I expect we'll modify our approach somewhat on future programs -- possibly drawing the lines in different places with regard to what we ask our partners to do." The memo was published online by industry blog FlightBlogger ( here ), run by aviation enthusiast Jon Ostrower. Boeing confirmed the authenticity of the memo but declined to comment further. McNerney's message, entitled "Time to deliver on the 787," comes shortly after Boeing announced the third major delay on the aircraft, which has not yet left the ground for tests almost a year after major assembly of the first plane started. The Chicago-based company shook up the industry and upset some of its own employees five years ago when it announced a plan to hire outside companies to build most of the 787 and ship the parts to its Seattle-area plant for assembly, instead of making more of the plane itself. OFFLOADS RISK The plan, which offloads some of the financial risk of developing the plane to its main partners in Japan, Italy and elsewhere, was hailed as the future of aircraft manufacturing by some, but dismissed as mere cost-cutting by others. Naysayers felt that Boeing may have given up too much control of the manufacturing process. Some of those fears have been realized, as suppliers have struggled to deliver finished work to Seattle, forcing Boeing employees to do more of the work themselves in a plant that was only designed for assembly. The situation at the 787 plant was improving, said McNerney, who visited the site in the past few days. "The condition of the assemblies built by our structural partners is improving noticeably with each successive unit," said McNerney in the memo. "And that is vitally important for getting us back to where we are doing only the work we originally planned to do in our own factory." McNerney, whose reputation is at stake with the 787, said the "innovation" part of producing the 787 was on track, but "execution" was a problem. "We have gotten the innovation piece of it right," said McNerney in the memo. "The execution piece -- with specific regard to the business model and our oversight of the supply chain -- has been much more of a challenge, and has produced a series of lessons-learned which we will collect and apply across the enterprise." That could mean Boeing will take a different approach on its next big project, a replacement of its best-selling single-aisle 737 plane. 737 REPLACEMENT Boeing has not yet made public any plans for a 737 replacement, but several airlines are calling for a new model, and analysts are expecting Boeing to bring a jet to market by the middle of the next decade. Boeing's delays on the 787 mirror problems at rival Airbus, a unit of European aerospace group EADS ( EAD.PA ), which delivered its A380 superjumbo two years behind schedule, devastating the company's earnings and seriously hurting its relationship with airlines. The U.S. plane maker is at risk of a similar effect, with first delivery of the 787 now planned for the third quarter of next year, about 15 months behind its original target of May 2008. The repeated delays have angered some of Boeing's customer airlines, which have ordered almost 900 of the planes worth about $145 billion at list value. "Our struggle to execute has come at a price, not the least of which is the impact to our customer relationships," said McNerney in the memo. He said he hoped to avoid revising the 787 schedule once again, which would further stretch the patience of customers and Wall Street analysts. "We've taken a more conservative approach to setting our milestones, based on our experience to date and the idea that being wrong yet again would be more of a burden to our customers than taking a little more time to get it right," McNerney said. (Reporting by Bill Rigby ; Editing by Brian Moss )

Lockheed Martin profit rises 6 percent. The world's largest defense contractor, which also runs a host of civil projects for the U.S. government, reported first-quarter profit of $730 million, or $1.75 per share, compared with $690 million, or $1.60 per share, in the year-ago quarter. (Reporting by Bill Rigby ; Editing by Steve Orlofsky)

Yahoo results won't affect Microsoft offer: Ballmer. "We think we can accelerate our strategy by buying Yahoo and will pay what makes sense for our shareholders," Ballmer said. "I wish Yahoo all the success with its results but it doesn't affect the value of Yahoo to Microsoft." Ballmer, speaking at the launch of Microsoft's Web portal for North Africa, MSN Maghreb, has set a Saturday deadline for Yahoo's board to accept a deal with Microsoft or face a lower bid that it takes directly to Yahoo's shareholders. In its first-quarter results, due later on Tuesday, Yahoo is expected to show progress in stabilizing its Web media and advertising business after two years of decline. In Yahoo's favor are low expectations from investors accustomed to seeing the company fall short in recent quarters. Yahoo officials are expected to use the results to argue why Microsoft's $31 a share cash-and-stock offer undervalues its growth potential and give the company ammunition in arguing for a higher price. Microsoft has said its offer is "full and fair," refusing to sweeten its bid since it has yet to see Yahoo raise a credible alternative. On January 29 -- the day before Microsoft presented Yahoo's board with an unsolicited takeover bid -- Yahoo warned it had a tough year ahead as it cut jobs and spent more to shore up its advertising business. Projections for Yahoo profits range from between 6 cents to 13 cents per share. On average, Wall Street expects 9 cents, down from 10 cents a year earlier, according to Reuters Estimates. (Reporting by Tom Pfeiffer; Editing by Derek Caney )

Tribune near plan to sell Newsday to News Corp. Another person briefed on the matter said the two parties are "very close" to a deal. Under the terms of the alliance, Tribune's Newsday would be part of a joint venture with News Corp's money-losing New York Post, allowing the two publications to combine back office operations, the person said. News Corp would own most of the company, with Tribune keeping a very small stake. Additionally, Tribune could receive anywhere between $500 and $600 million in cash, the source said. Details of ownership are still being ironed out and there is still a small chance the deal could fall through, the person said. Both sources spoke on condition of anonymity because the talks are confidential. Selling the paper based on Long Island, adjacent to New York City, would be key to Tribune Chief Executive and Chicago real estate magnate Sam Zell's plans to help slash debt at the company. Zell took Tribune private in an $8.2 billion leveraged buyout that restructured the publisher as an employee-owned company, saddling it with more than $10 billion in debt. The Wall Street Journal said the deal is expected to wipe out as much as $50 million in annual losses that News Corp now incurs on the Post, with the combined Newsday-Post operation earning roughly $50 million. "MORE THAN ENOUGH" Newspaper analyst John Morton said Newsday "makes more than enough money to cover the Post's losses." The company had a cash flow of about $80 million in 2007, according to a source with knowledge of the discussions. "The combined operation would be profitable," Morton said. "There would be some administrative and production cost savings but the real goal would be to combine the advertising appeal and sell that jointly for advertisers that want both Long Island and New York City coverage." Analysts said a combined operation would also place News Corp's New York Post in a much stronger position against its main tabloid rival, the New York Daily News. The Daily News and the Post compete fiercely for readers and advertisers in New York City. In fact, Daily News owner Mortimer Zuckerman had also made a bid for Newsday, a source told Reuters earlier this month. Pali Research analyst Richard Greenfield expressed concern about the timing of the purchase. "Leveraging the investment in the New York Post certainly is logical," Greenfield said. "But expanding in the newspaper business at a time like this -- as investors, we would prefer to see News Corp not do that right now." Newspapers have been struggling with declining ad revenue and waning readership as more advertisers and readers move to digital media and get their news and place their ads online. Newspapers have also taken a hit amid the weak U.S. economy and a recession in total advertising spending. "HIGHER-GROWTH COMPANY" "Investors view News Corp as the higher-growth media company," said UBS analyst Michael Morris. "And acquiring more newspapers at a time like this is contradictory to that thesis." Morton, however, said the purchase comes at a good time. "If anyone does want to buy a newspaper, this is the time to do it. Five years ago, Newsday would probably have been worth more than $1 billion. Prices are low now. It's not a good time to sell, but it's certainly a good time to buy." For Tribune, the sale comes at a time when the company is at risk of defaulting on its debt in 18 months if the newspaper business deteriorates further and it fails to unload assets. Regulatory issues could slow the sale, particularly media ownership issues that could restrict the number of properties that News Corp and Chief Executive Rupert Murdoch could own in the New York Area. The U.S. government restricts the number of papers that media companies own in certain markets where they also own television stations. In the New York City area, Murdoch also owns The Wall Street Journal and Fox affiliate WNYW-TV, in addition to the New York Post. (Reporting by Robert MacMillan and Jui Chakravorty; Additional reporting by Kenneth Li ; Editing by Brian Moss )

Airbus sees no negotiated settlement with Boeing. The European Union and the United States are pursuing competing complaints at the World Trade Organisation (WTO) over tens of billions of euros and dollars in state support provided to Boeing ( BA.N ) and Airbus, a unit of EADS ( EAD.PA ). Airbus CEO Tom Enders said that while he expects the WTO to rule on the two cases later this year, a negotiated settlement with Boeing was unlikely before then. Airbus had made a couple of approaches to suggest negotiations but they had not been fruitful, he said. "I still believe that a really sustainable solution has to be negotiated," he told Reuters. Relations were further strained when the U.S. Air Force awarded a $35 billion contract earlier this year for aerial refueling tankers to Northrop Grumman Corp. ( NOC.N ) and EADS rather than Boeing. Enders was speaking after signing an agreement with Scott Carson, CEO of Boeing Commercial Airplanes, to cooperate to improve global air traffic control systems. Both Enders and Carson told an earlier news conference the two companies would continue to compete aggressively in making and marketing planes. But just as they already cooperated on safety, the two now saw the potential to cooperate on the environment. The aviation industry is fast approaching a crisis because of congestion in the United States and Europe, Enders said. A state-of-the-art air traffic management system in Europe would allow the industry to save 10-12 percent of fuel consumption in a few years, he said. This work would not be restricted to planemakers but involve other sectors such as electronics, the two noted. "We will also collaborate in areas to improve the overall environmental performance of the aviation industry," Boeing spokesman Charlie Miller said. Enders said this cooperation would involve both companies working with their suppliers -- whom they share in many cases -- so that they understand how they can improve their environmental performance. (Editing by David Cowell)

Home prices up 0.6 percent in February. The Office of Federal Housing Enterprise Oversight (OFHEO) said its index of home prices is down 3.1 percent since a peak in April 2007. Prices were up in all but two of the nine regions tracked in this index. They were down 0.6 percent in the Mountain region: Arizona, Colorado, Idaho, Montana, Nevada, New Mexico Utah and Wyoming. Prices fell 0.2 percent in the South Atlantic region: Florida, Georgia, South Carolina, North Carolina, Virginia, West Virginia, Maryland, Delaware and the District of Columbia. The OFHEO index is calculated using purchase prices of houses financed with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. The index was introduced in the fourth quarter of 2007. (Reporting By Joanne Morrison; Editing by Jonathan Oatis )

Yahoo results better, not seen moving Microsoft. Yahoo left its revenue outlook for the year unchanged, and its shares ticked down half a percent in extended trading. "Microsoft is breathing a sigh of relief," said Jim Friedland, analyst at Cowen & Co. "Even though these are solid results, given long- and short-term challenges, there's been no overall shift in Yahoo's business." "Microsoft's offer is still the best offer on the table," he said, adding that the software maker could "modestly raise" its $43 billion cash-and-share bid just to close the deal. Mike Binger, fund manager at Thrivent Financial, which owns shares in both Microsoft and Yahoo, said: "I would say at this point Microsoft would stay their bid." Buoyed by a large gain on a stake in China's Alibaba.com Ltd, Yahoo's first-quarter net income rose to $542.2 million, or 37 cents per diluted share, from the year-ago quarter's $142.4 million, or 10 cents per diluted share. Excluding one-time items and stock compensation costs, the beleaguered Internet company reported a profit of $150 million, or 11 cents per share. On that basis, Wall Street on average was looking for a profit of 9 cents per share, according to Reuters Estimates. Chief Financial Officer Blake Jorgensen made a point of saying the company's results were "right on track," despite having to deal with the distraction of Microsoft's offer. "We are not opposed to a deal with Microsoft," Jorgensen told Reuters in an interview. "What we are opposed to is seeing it at a value that discounts the underlying value of the company." First-quarter revenue rose 9 percent to $1.82 billion. Excluding payments to advertising affiliates, or traffic acquisition costs (TAC), revenue rose 14 percent to $1.35 billion. Yahoo kept its 2008 total revenue forecast at $7.2 billion to $8.0 billion, unchanged from the outlook it gave in January, but it did not comment on revenue excluding TAC, which is the figure Wall Street focuses on. Yahoo shares fell in extended trade to $28.39 from a Nasdaq close of $28.54. Microsoft shares rose to $30.41 from a Nasdaq close of $30.25. (Additional reporting by Anupreeta Das , Daisuke Wakabayashi and Peter Henderson in San Francisco and Kenneth Li in New York; Writing by Michele Gershberg ; Editing by Braden Reddall )

Intrepid Potash IPO raises $960 million. The 30 million-share offering sold for $32 per share, according to an underwriter. At $32, the IPO price was $3 above the top of the $27 to $29 forecast range. The offering had already been increased from 24 million shares and an estimated price of $24 to $26 per share. Underwriters, who include Goldman Sachs, Merrill Lynch, Morgan Stanley, RBC Capital Markets and BMO Capital markets, have the option to purchase an additional 4.5 million shares from the company. Rising demand for grain across the globe, driven largely by the growing needs of developing economies and the increasing use of biofuels, have led to soaring food grain prices. Farmers trying to boost yields are using more fertilizers, leading to tight global supply conditions for crop nutrients and bumper profits for fertilizer producers. Intrepid Potash, which accounts for about 1.5 percent of global potash production, is well-placed to take advantage of this growing demand, making it attractive to investors even in a dull market for initial public offerings. Shares of North American fertilizer producers have risen dramatically in the last 12 months -- and companies with sizable potash assets have been among the biggest winners in the sector. CNBC's Jim Cramer has recommended Intrepid Potash's stock on his television show. The company will trade on the New York Stock Exchange under the symbol "IPI" ( IPI.N ). (Reporting by Emily Chasan and Aarthi Sivaraman ; Editing by Braden Reddall and Quentin Bryar)

Oil rallies to record near $120 on supply worries. Further support came from data showing demand in China, the world's No. 2 consumer, leaped 8 percent in March from a year ago, the fastest rate in 19 months as refiners boosted imports ahead of the Olympics. U.S. crude settled up $1.89 at $119.37 a barrel after hitting an all-time peak of $119.90 earlier. London Brent crude gained $1.52 to settle at $115.95 a barrel, after rising to a record peak of $116.75. Oil's fresh highs extended a rally that has seen prices climb more than five-fold since 2002, as booming demand from emerging markets such as China has coincided with long-term supply constraints. The slumping U.S. greenback, which tumbled to fresh lows against the euro on Tuesday, has also helped boost dollar-denominated commodities like oil and attracted speculative inflows from hedge funds. "The trend is up and the market didn't break down when it moved lower in the morning, and you have the weak dollar and the supply disruptions are in the mix," said Eric Wittenauer, analyst at Wachovia Securities. Pipeline attacks in OPEC member Nigeria last week shut 169,000 barrels per day (bpd) of Bonny Light production, forcing Royal Dutch Shell Plc to declare force majeure on crude oil exports. Nigerian rebels also attacked two Shell oil pipelines in the Niger Delta on Monday. Management and union officials are in talks to avoid a planned two-day strike at Scotland's Grangemouth refinery, which could force the shut-in of some oil and natural gas production from the North Sea. Oil producers gathered in Rome for the International Energy Forum said they can do nothing to halt oil's rally and the world might have to live with even higher prices if it wants supplies for the future. Ali al-Naimi, oil minister to OPEC kingpin Saudi Arabia, said a lack of investment in crude and refining capacity -- not a lack of reserves -- was driving prices higher. "Recently, I have observed an unprecedented level of uncertainty, doubt and even fear in discussions about the future of energy and its impact on global economic prospects," Naimi said. "I can assure you unequivocally that the world is not running out of oil." Rising energy costs and the U.S. economic crisis have forced analysts to revise downward oil demand growth forecasts for the world's largest consumer, which has lobbied OPEC to increase output to help lower prices. President George W. Bush on Tuesday said he was concerned about record-high crude oil and gasoline prices, and said the United States needs to tap an Alaskan wildlife refuge to boost supply. (Reporting by Matthew Robinson, Gene Ramos , and Robert Gibbons in New York; Jane Merriman in London; Felicia Loo in Singapore; Editing by David Gregorio )

Boeing wins $1.27 billion Bangladesh offer. Boeing will supply four 777-300ER aircraft by 2013 and four 787-8s Dreamliner aircraft by 2020, according to a final deal signed on Tuesday. The airline also agreed to buy two more Boeing aircraft worth nearly $110 million by 2015 to boost flight frequency. The airline rejected a separate offer from Europe's Airbus ( EAD.PA ) to supply four aircraft from any of the A-320, A-321 and A-330 models. Boeing will supply the four 777-300ER aircraft by 2013 and the four Dreamliners between 2019 and 2020. "We will also buy two Boeing 737-800 aircraft with the price nearly $55 million for each plane," Mahbub Jamil, chairman of Biman told a news conference. Boeing has pledged to supply the two 737-800 aircraft by 2015, another Biman official said. Biman, which will fund the purchase through bank loans, became a public limited company in July, still 100 percent state-owned, as part of rescue plan by the country's army-backed interim government. "We are extremely happy on the order and decision to buy more aircraft from our company," said Marty A. Bentrott, a senior vice president of Boeing. Biman was forced to halt its flights to New York, Paris, Tokyo, Frankfurt, Brussels, Yangon and Mumbai in 2006 due to a shortage of funds and aircraft. Bangladeshi Biman plans to modernise and expand its fleet to enable it to reopen the routes it had to close, Jamil said. To meet immediate needs, Biman will lease two aircraft to reopen its Dhaka-London-New York route. It flies 19 international routes with a fleet of 11 aircraft, but faces competition from four smaller, local private airlines, one of which has extended its operations to include regional routes connecting the Bangladeshi capital Dhaka to Kuala Lumpur, Singapore, Delhi and Dubai. (Writing by Nizam Ahmed, editing by Elizabeth Fullerton)

UnitedHealth profit misses, cuts 2008 forecast. The gloomy outlook from the largest U.S. health insurer by market value -- which cited both broad factors and company missteps -- became the latest hit to confidence in the industry. Shares of rivals Aetna Inc ( AET.N ), WellPoint Inc ( WLP.N ) and Cigna Corp also fell about 4 percent. Although prior UnitedHealth comments had girded investors for a forecast cut, analysts said the 10 percent reduction was worse than expected. "This is nowhere near what we thought; this is much worse," said David Heupel, a portfolio manager with Thrivent Investment Management. "For the industry bellwether to come out and cut numbers to that extent is significantly bad." The lower outlook stemmed largely from weaker revenue growth and margins for its commercial plans for employers and Medicare plans for the elderly. UnitedHealth cut membership forecasts in both areas. The Minneapolis-based company, whose shares fell as much as 11.5 percent, also said industry competition for membership growth is taking a toll on its enrollment. Furthermore, a weak U.S. economy is causing customers to seek leaner benefits that produce less revenue and companies to cut jobs that reduce membership. The company is being hurt to a lesser degree by high costs from the flu and reduced investment income. UnitedHealth Chief Executive Officer Stephen Hemsley said the results were "not acceptable" and they were due "in part to our own performance." UnitedHealth, whose report kicks off earnings season for the industry, is the latest health insurer to lower its 2008 forecast since March. At the time, WellPoint, the largest U.S. health insurer by membership, stunned the market by cutting its outlook. While several health insurers have since warned about their 2008 prospects, some companies have said their problems are contained while others like UnitedHealth and WellPoint blamed multiple issues. Analysts are divided over whether these profit warnings represent company-specific problems or evidence of a broad industry downturn. "I think we'll see better reports coming out of some of the peers in the next week or two, but there's no question that there's some macro-economic concerns that are going to impact everybody in this industry," Heupel said. UnitedHealth posted first-quarter net income of $994 million, or 78 cents per share, compared with $927 million, or 66 cents per share, a year earlier. Analysts on average expected 80 cents, according to Reuters Estimates. Revenue rose 7 percent to $20.3 billion. The company served medical benefits to about 32.4 million people as of the end of March, up about 5 percent from a year ago, helped by its acquisitions of Fiserv and Sierra Health Services. But excluding acquisitions, membership fell sharply for its commercial plans for which it assumes full insurance risk. It expects such membership to fall by about 700,000 this year. UnitedHealth said it was refusing to cut premium pricing to compete with other plans, hurting its growth. "The market is so competitive it's hard to have pricing keep up with (medical) cost trends, so businesses like United seem to be walking away from some of the lower-margin parts of the business," said Tim Nelson, a senior healthcare analyst with First American Funds. "That's going to mean very little growth for the industry." The company's operating costs also jumped to 14.3 percent of revenue, 1.2 percentage points higher than a year earlier. It said it incurred those costs to support business that failed to materialize and said it would selectively pare back expenses throughout the year. Further, the company said its Medicare business is shifting toward less profitable products, and lowered its membership forecast for full-service Medicare Advantage plans. UnitedHealth is one of the largest U.S. providers of Medicare plans. One bright spot has been its Medicaid business serving low-income Americans, which grew revenues by 23 percent to $1.2 billion. The company said on Tuesday it won a Medicaid contract in Tennessee that will add $1 billion in revenue next year. The company reduced its 2008 outlook by 40 cents per share to a range of $3.55 to $3.60 per share, reflecting growth of as much as 5 percent. Analysts expected $3.86 per share. On a conference call to discuss the results, investors urged the company to consider actions potentially friendly to shareholders, including a cash dividend or divesting its non-insurance businesses, such as its pharmacy services unit. Shares of UnitedHealth fell $4.09, or 10.8 percent, to $33.72 in afternoon trading on the New York Stock Exchange. They earlier fell as low as $33.48, their lowest price in more than three years. UnitedHealth shares have tumbled 42 percent this year, while the Morgan Stanley Healthcare Payor index .HMO is off 36 percent this year. (Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn and Derek Caney )

Coach posts higher profit. Coach said net income in its third quarter ended March 29 rose 8 percent to $162.4 million, or 46 cents per share, from $150.0 million, or 40 cents per share, a year ago. Analysts on average were expecting 45 cents per share, according to Reuters Estimates. Net sales for the quarter rose to $744.5 million from $625.3 million a year ago, as sales at North American stores open at least a year climbed 9 percent. Sales from stores in Japan rose 12 percent, excluding the impact of the strong yen, which boosts the value of international sales when converted into dollars. Froms now on, Coach said it will only report same-store sales results for its full-priced and factory stores taken together. The company said it still expects earnings of $2.06 per share in 2008 but raised its sales target, after already lowering it once this year due to the weak retail climate. Coach said it now expects 2008 sales of about $3.18 billion. In January, it forecast sales of "at least $3.15 billion," which compared to an earlier forecast for sales of $3.17 billion. The full-year forecast implies fourth-quarter earnings of 50 cents per share on sales of about $780 million, the company said. That compares to analysts' average expectation for a profit of 49 cents per share, excluding items, on sales of $759.8 million, according to Reuters Estimates. "Due to the continued uncertainty in the economic backdrop, we believe that it's prudent to wait until our fourth-quarter report to offer guidance for the upcoming fiscal year," Chief Executive Lew Frankfort said in a statement. (Reporting by Martinne Geller ; Editing by Mark Porter and Steve Orlofsky)

CME shares savaged after earnings miss. Chief Executive Craig Donohue cited a "challenging environment" for many CME customers, and Chief Financial Officer Jamie Parisi said higher trading margins imposed because of extreme market volatility may also be lowering activity from some traders. Still, CME officials said that the process of "deleveraging," or reducing credit risk, under way as financial firms shed counterparty exposure should not crimp derivatives volume growth in the quarters ahead. CME's first-quarter net income rose to $284 million, or $5.25 per share, from $130 million, or $3.69 per share, a year ago. Excluding a benefit from a change in state tax laws, CME earned $4.67 a share, below the average Wall Street estimate of $4.83 a share as compiled by Reuters Estimates. Revenue rose to $625 million, missing the average analysts' forecast of $630 million. Edward Ditmire, analyst at Fox Pitt Kelton, called the plunge an "exaggerated response" to the earnings miss. "This just isn't a stock that people are used to see miss earnings targets," he added. Much of the earnings miss reflected lower investment income, a result of lower U.S. interest rates, and higher non-operating expenses. Still, CME officials were quizzed about a drop in year-on-year open interest for Eurodollar contracts, its biggest single product line. Open interest can be a leading indicator of trading volume going forward. If it shrinks, CME's years-long run of aggressive volume growth -- the foundation of analysts' earnings forecasts -- could also be at risk. Still, company officials played down the threat. "We are not seeing much business being lost because of credit problems," CME Chairman Terry Duffy told Reuters in an interview. "On the contrary, customers are coming to us because of the transparency we offer." Donohue said CME's mix of customers immunized the exchange against a slowdown from any one sector, and added that the exchange was targeting more marketing efforts toward rapidly growing sovereign wealth funds. "We've seen a flight to quality where people are turning to a centrally-cleared market ... and that's offsetting a deleveraging of banks' balance sheets," he said. CME's average rate per contract (RPC), a key measure of margins, fell by 2.7 percent to 63.0 cents from 64.8 cents in the fourth quarter of 2007 and 64.0 cents a year earlier. Parisi said the lower rate represented faster growth in volume from members, who pay lower fees to trade than do non-members. First-quarter derivatives trading volume was previously reported at 13.7 million contracts per day, up 32 percent, but volume in March alone was up only 15 percent. "The near-term could be slightly challenging until volumes accelerate from current levels," Christopher Allen, analyst at Bank of America, said in a research note. CME Group average daily volume had six-year compounded growth of 27 percent. CME is set to acquire NYMEX, the energy and precious metals mart, for about $9.4 billion, subject to shareholder and regulatory approval. Duffy dismissed press reports that some NYMEX shareholders would pressure CME to raise its offer, saying that it had a definitive agreement with NYMEX. The company's shares were down more than 10 percent, or $56.29, at $467.21, in afternoon trading on the New York Stock Exchange. (Additional reporting by Phil Wahba in New York; Editing by Steve Orlofsky)

Nomura caught in insider trading scandal. The insider trading scandal, the broker's second in five years, comes on top of falling profits and $1.4 billion in subprime losses, after which the firm replaced its CEO. Recently appointed CEO Kenichi Watanabe bowed in apology for the scandal, which drew harsh comments from government officials and sent the firm's share price down 3.9 percent. It also led to a drop-off in business at the firm on Tuesday as some institutional investors stopped placing orders due to compliance concerns, a source on the Nomura trading floor said. Watanabe said the employee at the centre of the probe had been dismissed for violating company rules and warned the case would have an unspecified impact on earnings. "We are sorry for failing to contribute to a fair market, as a company that deals with the brokerage industry," he said. "It was significant that we were involved in something that hurt the brokerage industry," he said, adding he saw the case as an individual matter, rather than a sign of wider problems at his firm. The employee at the centre of the scandal worked in the M&A advisory department where he repeatedly used insider information about merger and acquisition deals, a source with direct knowledge of the matter said. The 30-year old, from Nomura's Hong Kong unit, was suspected of giving information on merger deals to two acquaintances who then profited on stock trades, Kyodo News agency said. LIMITED IMPACT SEEN "We are not very busy today because of the stopped orders," a Nomura stocks sales trader said, but analysts said they saw little lasting impact on the firm's business and stock price from its latest woes. "Clients can't really avoid Nomura as it's by far the biggest M&A broker in Japan," said Tatsuo Majima, an analyst at Deutsche Securities. "Some companies with strict compliance rules may reduce dealings with Nomura, but that won't lead to any prominent decline in its businesses or earnings." Tumbling Japanese stocks over the past year have cut into broking commissions and delayed lucrative M&A deals and share offerings, hitting Japanese brokerage houses, including Nomura. As well, it has reported around 140 billion yen ($1.4 billion) in losses on U.S. mortgage-backed securities. <ID:nT185250> Those problems have seen the broker's shares slide 32 percent in the past year, underperforming a nearly one-quarter fall by the benchmark Nikkei share average .N225 . Nomura stock fell 3.9 percent on Tuesday to 1,639 yen, underperforming a weak securities sector .ISECU.T that fell 3.6 percent and a 1.1 percent fall in the Nikkei. Nomura handled $24.8 billion worth of M&A deals for Japanese companies in the year to March, grabbing about a 19 percent market share, data from Thomson Financial showed. "It's outrageous for any employee at a large securities brokerage to engage in insider trading," Japanese Financial Services Minister Yoshimi Watanabe told reporters. "We'll deal strictly with any criminal act." LURED TO TOKYO The employee under investigation was lured to Tokyo from Hong Kong on Monday on the pretence of a business trip, the source with direct knowledge of the matter said. Kyodo News said he had since been interviewed by the regulator and would be arrested soon. Credit Suisse analyst Azuma Ohno said the response by Nomura would be important to limiting fallout from the scandal. "It all boils down to the issue of what the company should do about its internal and information management structure," Ohno said, although he played down the risk of ongoing damage. The employee, a Chinese national, leaked M&A information to two Chinese acquaintances, the Nikkei business daily said. The three allegedly used internal information about M&A deals and bids handled by Nomura Securities to trade shares of two listed companies in 2006 and 2007, the Nikkei said. The paper also said the three traded shares of 19 other companies for which the corporate information division handled bids and M&A deals. The paper did not name the affected firms. A Nomura Securities official was prosecuted by the securities watchdog in 2003 for insider trading related to a bid for a unit of defunct trading house Nichimen, which is now known as Sojitz ( 2768.T ). ($1=103.06 Yen) (Editing by Nathan Layne and Rodney Joyce )

Credit Suisse cuts 500 more investment bank jobs. "Due to market conditions and projected staffing levels required to meet client needs, we are reducing global headcount by approximately 500 across our Investment Banking Division and Shared Services Division," it said in a statement. The bank declined to elaborate. The job losses are in addition to about 500 investment banking cuts made in January and 170 cuts in the same division announced in October, a source close to the bank said. The source said the cuts would be made across investment banking businesses, such as mergers and acquisitions, fixed income and equities trading. Financial companies including Citigroup ( C.N ), JPMorgan ( JPM.N ) and Lehman Brothers LEH.N have slashed a total of at least 70,000 jobs in the United States and Europe and further headcount reductions are expected by many in the markets. (Reporting by Olesya Dmitracova ; Editing by David Holmes )

Court upholds Netflix "throttling" settlement. In a ruling issued on Monday, an appeals court in Los Angeles rejected the plaintiffs' claims that the attorneys fees awarded by the trial court were "excessive," the way that subscribers were notified of the terms was "deficient," and that the settlement should have consisted of a cash award rather than a free month of Netflix rentals. The original lawsuit, filed in San Francisco state court by Netflix subscriber Frank Chavez, accused the Los Gatos, California, company of delaying delivery of DVDs by mail to heavier users who are less profitable, a practice that came to be known as "throttling." Under the settlement, Netflix provided a free month of rental or a service upgrade to 5.5 million current and former subscribers and paid the plaintiffs' attorneys fees and costs. (Reporting by Gina Keating ; Editing by Brian Moss )

Investors find record RBS cash call hard to swallow. The biggest-ever rights issue, designed to cover increased writedowns on the value of toxic assets and to repair RBS's balance sheet, marks an embarrassing U-turn after the bank said earlier this year it did not need to raise capital. "It's a massive rights issue but I'm not necessarily sure it covers all the cracks," said Paul Branigan, chief investment officer of Premier Asset Management, who sold out of Royal Bank of Scotland last year. "It doesn't look like they've kitchen-sinked it ... there could still be more to come." A London-based fund manager who requested anonymity said: "I found this hard to stomach. Only seven weeks ago, RBS stated its confidence in a strategy that would see its capital ratio returning to a normal level over a three year period. And now the bank reveals such massive writedowns." With the rights issue and asset sales, RBS's core tier one capital ratio will rise to more than 6 percent by the end of 2008 from 4.5 percent, one of the lowest in Europe, at the end of 2007. "(Chief Executive) Sir Fred Goodwin justifies continued support. However, he has to fully engage with his shareholder base and a strengthened non-executive board to maintain that support," said David Cumming, head of UK equities at Standard Life investments, which holds 3.5 percent of RBS. The bank's chairman said Goodwin and other executives had the board's support. "I think some shareholders are quite cross about it ... (But) the market seems to have accepted the issue, another shareholder said." However, concerns remain about the bank's valuation, the gloomy outlook for the UK banking sector, and whether RBS will announce more bad news. The rights issue is massively earnings dilutive, leaving the bank on 7.6 times forecast 2008 earnings, based on the ex-rights price of 307p per share. This is at a premium to domestic peers Barclays ( BARC.L ), which is on 6.7 times, and HBOS HBOS.L on 5.5 times, but at a slight discount to Lloyds ( LLOY.L ), on 8.3 times, and Alliance & Leicester ALLL.L on 8.6 times. RBS on Tuesday announced 5.9 billion pounds of writedowns before tax, on top of 2.4 billion pounds announced last year. It said the scale of its latest markdowns was conservative. RBS's credit ratings came under pressure, with Fitch Ratings cutting one notch to AA and Moody's Investors Service warning it could strip the bank of its Aaa rating. Standard & Poor's said it maintained a negative outlook on the bank. (Additional reporting by Richard Barley; Editing by Erica Billingham)

Americans say jobs key to keeping home: survey. Many Americans are using a large portion of their budget for housing, and 43 percent of those surveyed in mid-February said they spend more than the generally recommended 30 percent of household income for housing. The survey found that 22 percent of respondents would lose their house or apartment with an unexpected short-term job loss, and 30 percent are working paycheck to paycheck to cover housing costs. "There is definitely a lot of pressure and stress on American households right now," said Alan Steel, general manager of AOL Real Estate. Thirty percent of respondents said they know someone who has gone through or is being forced to sell their home due to a foreclosure. "In this environment too many people are passive and maybe deny things, but with all the headlines these days everyone should get really smart about their own situation and figure out what they can do," Steel said. Despite the headlines about housing troubles, 31 percent of respondents believe their homes are worth more than they were a year ago and 56 percent do not think their home will be worth less in five years. This optimism continues, with 69 percent of Americans seeing real estate as a viable investment. If forced to sell their home today, half would buy another home rather than rent. They also would also prefer to use their computers when house shopping, with 67 percent turning to the Internet first when looking for a home. For those not interested in selling or purchasing a home this year, 16 percent said they were planning a major home remodeling project. Interviews for the AOL Real Estate-Zogby International survey were conducted among a national sample of 6,678 adults ages 18 and older, conducted February 15-18. Members of the online Internet panel were recruited by Zogby. The margin of error is plus or minus 1.2 percentage points. (Reporting by Julie Haviv; Editing by Dan Grebler)

Alaska rejects final Exxon plan for giant gas field. Exxon said it will appeal the decision, which terminates the Point Thomson development unit and could lead to the cancellation of the field leases. A spokeswoman said the energy company plans to "pursue all alternatives to protect our rights to develop these resources." Chevron Corp ( CVX.N ), which holds a 25 percent stake in Point Thomson, vowed to sue over the decision. "We are shocked and very disappointed by this decision," Scott Davis, the Chevron executive overseeing its Alaska business, said in a statement. "With this decision the state has taken a giant step backward in bringing North Slope gas to market." Point Thomson, discovered in 1977, is thought to hold at least 8 trillion cubic feet of natural gas reserves and 200 million barrels of liquids and would be a vital source of supply for any Alaska natural gas pipeline project. The state has accused the oil companies of deliberately delaying development of Point Thomson. The majors reject that charge, saying the giant gas field cannot be put into production until a pipeline is constructed to ship Alaska gas to the rest of the United States. Field operator Exxon owns about 36 percent of Point Thomson, and BP Plc ( BP.L ) owns 32 percent of the field. The Alaska Department of Natural Resources ruling said Exxon's failure to develop the field under 22 previously submitted development plans compromised the credibility of its latest proposal. "The history of this unit and the evidence offered by the Appellants have convinced me that approving the (development plan) will not result in timely development of these valuable state lands," DNR Commissioner Tom Irwin wrote. Alaska Gov. Sarah Palin, a strong critic of the oil industry, welcomed the decision. "I support the commissioner's decision because I want development and Alaskans are ready to see real progress at Point Thomson, finally, after 30 years," she said in a statement. Alaska and the companies have been sparring over Point Thomson since late 2005 when the state made the first step to break up the field unit and possibly cancel the leases. The state so far has been successful in early legal battles. Officials concede that a lengthy period of litigation may ensue. BP and ConocoPhillips both hold stakes in Point Thomson and have been spearheading efforts to build a $30 billion Alaska natural gas pipeline. Plans for that project still are moving forward, according to BP Alaska spokesman Steve Reinhardt. Still, he cautioned that doubts about the availability of Point Thomson gas could delay or even kill the pipeline. If the companies are unable to develop Point Thomson, they also will miss out on adding the reserves from the field to their reserve base. All the companies involved have struggled in recently to add oil and gas to keep up with their production, prompting questions about their long-term growth prospects. Exxon has 20 calendar days to appeal the DNR's decision. Following an unsuccessful appeal with the DNR, Exxon would have recourse to state courts under Alaska law. (Additional reporting by Robert Campbell and Michael Erman in New York; Editing by Christian Wiessner )

Bush voices concern about record oil price. "I am obviously concerned for our consumers," Bush said at a news conference along with Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon. Before he spoke, U.S. crude prices had hit an all-time peak of $119.90. Average U.S. gasoline prices this week hit a record $3.51 a gallon at the pump, according to U.S. government figures, with prices in some West Coast cities like San Francisco surging past $4. Bush declined a reporter's request to comment on whether big OPEC producers like Saudi Arabia were coming to the aid of U.S. consumers, but heaped praise on Canada and Mexico - consistently among the top five U.S. suppliers. "Fortunately Canada and Mexico are our biggest providers, for which we are grateful," Bush said. Bush reiterated his call for the U.S. Congress to overturn a long-standing moratorium on drilling for oil in Alaska's Arctic National Wildlife Refuge (ANWR), home to wildlife like polar bears and migratory birds. "We should have been exploring for oil in ANWR," Bush said. "As a result we are dependent on foreign sources of oil." (Writing by Chris Baltimore ; Editing by David Gregorio )

Agriculture sector boosts DuPont profit. Growing food demand from developing countries and global mandates for the increased use of biofuels have led to soaring grain prices that have encouraged farmers to use more high-yielding biotech seeds, while also increasing their use of fertilizers and crop protection chemicals. DuPont affirmed its second-quarter and full-year outlooks, while cautioning that weakness in the United States is likely to weigh on strong overseas growth through the rest of 2008. Net income rose to $1.19 billion, or $1.31 a share, from $945 million, or $1.01 a share, a year earlier. Analysts on average were expecting $1.29 a share, according to Reuters Estimates. The company's profit also benefited from strong growth in Europe and Asia Pacific, which helped offset major volume declines in the United States, where the construction and automotive industries are slumping. "The highlight was the 6 percent (in) price increases and the lowlight was the 5 percent decline in U.S. volumes," said Soleil Securities analyst Mark Gulley. Quarterly net sales rose 9 percent to $8.58 billion, matching Wall Street's forecast, as improved pricing and a weak dollar outstripped the impact of slightly lower volumes and flat sales in the United States. "Our investments in agriculture and emerging markets enabled us to capitalize on robust growth in those areas which, when combined with gains from our productivity improvement programs, more than offset higher ingredient costs and weakness in certain U.S. markets," said DuPont Chief Executive Charles Holliday, in a statement. The Wilmington, Delaware-based company had raised its outlook for the first quarter twice in recent weeks, on the back of solid demand for its biotech seed offerings. DuPont expects full-year earnings of $3.40 to $3.55 per share, excluding items. Wall Street is expecting $3.48. The company also affirmed its second-quarter earnings outlook of about $1.05 per share, slightly below analysts' expectations of $1.09. Soleil's Gulley said the second-quarter forecast reflects some of DuPont's typical conservatism, but is also linked to the fact that 12 percent of the company's global sales come from the U.S. housing and automotive markets. DuPont sells products like Tyvek, Corian and powder coatings that are used in housing, while it is also a major supplier of paints, coatings and other systems used by the automotive industry. (Reporting by Euan Rocha; Editing by Lisa Von Ahn and Derek Caney )

Surging oil, disappointing outlooks hit Wall St.. Airline stocks .XAL were particularly hard hit, plunging 12.4 percent to a record low, as soaring oil has pushed jet fuel costs to record levels and retailers' shares .RLX dropped 2.2 percent on fears that Americans will curtail shopping to pay for higher gasoline prices. Texas Instruments Inc TXN.N added to worries about the economic outlook by warning of tepid demand for cell phones. Its stock fell 5.8 percent to $28.82. Inconsistent earnings during the quarterly reporting period have kept concerns about the economy close to the surface. While big multinationals with significant overseas sales have fared well, companies with a more domestic focus have sputtered. Oil "has done nothing but go straight up, and obviously, it has put a damper on any type of economic recovery, but after a certain point in time, the consumer is just going to have to stop spending," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets, in Baltimore. The Dow Jones industrial average .DJI fell 104.79 points, or 0.82 percent, to 12,720.23. The Standard & Poor's 500 Index .SPX slid 12.23 points, or 0.88 percent, to 1,375.94. The Nasdaq Composite Index .IXIC dropped 31.10 points, or 1.29 percent, to 2,376.94. Oil jumped to a record $119.90 a barrel intraday, fueled by weakness in the dollar, which encouraged buying of commodities, and developments in Nigeria and the U.K. that increased concerns about oil supply. "Anything having to do with transportation, the movement of goods and services, the entertainment business," is affected, Mata said. "You cannot have oil at the price it's at without having a disastrous effect on these businesses." YAHOO DROPS, YUM JUMPS AFTER BELL After the close, Yahoo Inc ( YHOO.O ) reported a profit, excluding items, at the top end of Wall Street's estimates. But its stock slipped 0.5 percent in after-hours trading to $28.39. During regular trading, Yahoo dipped 1 cent to close at $28.54 on the Nasdaq. Shares of Yum Brands Inc ( YUM.N ), however, shot up more than 3 percent to $39.95 after the bell as the operator of KFC, Taco Bell and Pizza Hut fast-food chains, posted a quarterly profit that topped Wall Street's estimates. Yum had closed on the NYSE at $38.49, down 1.5 percent before the results were released. AIRLINE STOCKS DIVE, APPLE FALLS Shares of UAL Corp UAUA.O, parent of United Airlines, plummeted 36.8 percent, or $7.88, to $13.55 on the Nasdaq after the company reported a quarterly loss that was more than triple a year ago on soaring fuel costs. AirTran Holdings AAI.N, parent of AirTran Airways, also reported a loss as did JetBlue Airways ( JBLU.O ). Shares of AirTran tumbled 20.8 percent, or 95 cents, to $3.61 on the New York Stock Exchange, while JetBlue's shares lost 5.7 percent, or 28 cents, to $4.65 on the Nasdaq. Shares of Apple Inc ( AAPL.O ) fell 4.7 percent to $160.20 on the Nasdaq. Apple ranked as the top drag on both the S&P 500 and the Nasdaq 100 .NDX after American Technology Research downgraded the iPod maker's stock to "neutral" from "buy," saying it is no longer inexpensive and the company's near-term results might not meet expectations. DuPont Co ( DD.N ), down 4 percent at $50.16 on the NYSE, led the major decliners in the Dow industrials. The chemicals maker said first-quarter profit rose, but gave a cautious outlook. Other companies disappointing investors included UnitedHealth Group Inc ( UNH.N ). It posted a lower-than-expected first-quarter profit, hurt by weakness in its business serving employers and slashed its full-year earnings forecast. Its shares fell 9.7 percent to $34.15. In economic news, the National Association of Realtors said the pace of existing home sales in the United States fell 2 percent in March, in a report that showed the U.S. housing market continues to struggle. Trading was moderate on the NYSE, with about 1.33 billion shares changing hands, well below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 1.95 billion shares traded, below last year's daily average of 2.17 billion. Declining stocks outnumbered advancing ones on the NYSE by more than 2 to 1 and on the Nasdaq by 3 to 1. (Editing by Jan Paschal )

RBS unveils $24 billion rights issue after fresh hit. Britain's second biggest bank said on Tuesday it would also sell assets to generate 4 billion pounds in core capital this year, mostly from the possible disposal of all or a stake in its insurance arm, which includes brands Direct Line and Churchill. The biggest-ever rights issue and planned disposals will allow RBS to rebuild its capital reserves, which have been stretched by its part in last year's takeover of Dutch bank ABN AMRO and turmoil in financial markets in recent months. RBS will offer 11 new shares for every 18 existing shares at 200 pence per share in the underwritten rights issue, representing a 46 percent discount to Monday's closing price. The size of the extra shares alone would represent Britain's 30th-biggest company. By 1520 GMT, RBS shares were down 4.7 percent at 355 pence, valuing the bank at 36 billion pounds. The theoretical ex-rights price for the shares is 307p, based on Monday's close. "It's a reassuring discount, and investors will be pleased that it's such a large amount and not 5 or 6 billion," said Mark Sartori, head of European trading at Fox-Pitt, Kelton. "They want RBS to raise some money so the company can move forward." RBS said it expects additional hits to the value of assets, including the ABN AMRO wholesale business it bought last year, due to the impact of the U.S. subprime mortgage crisis and subsequent credit crunch. It estimated the effect of writedowns on core capital will be 5.9 billion pounds, or 4.3 billion pounds after tax. The bank, which wrote down assets by 2.4 billion pounds last year, said the scale of its latest markdowns was conservative and had been checked by advisers. It valued below-prime Alt-A mortgages, for example, at 50 percent, down from 83 percent. Analysts said any further big hits seemed unlikely. Conditions in financial markets had deteriorated sharply in March and trading in parts of its investment bank arm had been hit by the turmoil, the bank said, but said overall recent trading had been satisfactory. It said expectations for 2008 were in line with the consensus market forecast. U-TURN Both the rights issue and the increased writedown were no surprise after several days of widespread speculation, but they mark an abrupt U-turn for RBS which said earlier this year it did not need to raise capital. RBS Chairman Tom McKillop told reporters on a conference call his board "unanimously" backed executives "to steer the bank successfully through this tricky period." After some investors called for heads to roll, he staunchly defended under-fire Chief Executive Fred Goodwin. "There is no single individual responsible for these events, and to look for a sacrificial lamb just misses the whole point," he said at a press conference. He also defended the strength and independence of the board, saying it contained "no patsies". McKillop said he was confident the rights issue would be supported following feedback from advisers. "We don't really have serious concerns there won't be support," he said. RBS said it plans to keep core tier 1 capital in excess of 6 percent, which would make it one of Europe's best capitalized banks. The ratio stood at 4.5 percent at the end of 2007, one of the lowest in Europe. Pressure has built on the world's largest lenders to shore up balance sheets battered by the credit crunch, at the same time that regulators are trying to unblock the credit pipeline. The Bank of England on Monday unveiled an ambitious plan to swap banks' risky mortgage assets for at least 50 billion pounds of government debt, prompting speculation it had urged RBS and others to raise capital in return. "This is very much the board's decision... we have not been asked to raise capital by anyone," McKillop said. "Historically RBS ran on very efficient balance sheets, but we've taken the decision that in today's world we need stronger capital ratios." CEO Goodwin acknowledged he had supported a tighter capital base but said his stance had shifted. "The world has changed and when that happens you have to revisit all the assumptions you make, and for us the obvious one was capital," he said. RBS said it will pay this year's interim dividend in shares, but planned a cash payout for the 2008 final dividend. It said a payout ratio of 45 percent was sustainable over the medium term. Goodwin said RBS's stronger capital would encourage it to lend and help the economy, and said he was optimistic that the BoE measures would help relax strains in the mortgage market. Finance minister Alistair Darling met lenders on Tuesday to discuss the plan. Analysts said now RBS has moved, other British banks could also bolster their balance sheets, notably Barclays ( BARC.L ) and HBOS HBOS.L. Shares in both banks fell on Tuesday. RBS will seek shareholder approval for the rights issue in mid-May. It is being advised by Goldman Sachs ( GS.N ), Merrill Lynch MER.N and UBS ( UBSN.VX ). All are underwriting the issue and with sub-underwriters could receive up to 210 million pounds in fees. (Additional reporting by Sitaraman Shankar; Editing by David Cowell/Andrew Hurst)

INSTANT VIEW: Yahoo profit beats estimates. COMMENTARY: JEFFREY LINDSAY, ANALYST, SANFORD C. BERNSTEIN & CO "This is better than the Street was expecting. This might pose some issues for Microsoft. It's less likely Microsoft would succeed with a lower bid. They wouldn't be able to reduce their price." MARK MOWREY, SENIOR ANALYST, AL FRANK ASSET MANAGEMENT, LAGUNA BEACH, CALIFORNIA: "We're not really impressed with this quarter. The company has been very innovative in the Web space but they haven't been able to turn that innovation into the kind of top-line growth you would expect to see compared to what Google is doing. We certainly do not think a Yahoo-Microsoft combination would solve the problem." JIM FRIEDLAND, ANALYST, COWEN & CO "Microsoft is breathing a sigh of relief. Even though these are solid results, given long and short term challenges, there's been no overall shift in Yahoo's business. Microsoft's offer is still the best offer on the table ... Could it modestly raise what it's willing to pay to just get the deal done? Yes. There's nothing in the results that would make Microsoft reassess its bid and raise it significantly. The trends are still the trends." MIKE BINGER, FUND MANAGER AT THRIVENT FINANCIAL IN MINNEAPOLIS, OWNS MICROSOFT AND YAHOO SHARES "First-quarter earnings look good, kind of in-line, maybe a little better on margins." "But there is some guidance out there that I don't have any explanation for, way ahead of estimates." "The only thing they've said is long-term investments are beginning to pay off. It's surprising that they can raise their next-quarter guidance so much. I would say at this point Microsoft would stay their bid." RYAN DETRICK, SENIOR TECHNICAL STRATEGIST, SCHAEFFER'S INVESTMENT RESEARCH, CINCINNATI, OHIO "From a fundamental point of view, the news looks pretty positive, but until the uncertainty of the company's potential buyout by Microsoft is lifted we really don't see the stock moving too significantly either up or down. "On the flipside, if the earnings are really good that could increase what Microsoft is anticipating to pay for Yahoo." SANDEEP AGGARWAL, ANALYST, COLLINS STEWART LLC "It is a modest beat top line. On their Q2 and full-year guidance, their top-line guidance is not clear about what is included in the definition. Their previous full-year revenue guidance has $5.65 billion as the mid-point and the new range has $7.6 billion as the mid-point. I would qualify that comparison because we may not be comparing apples to apples. It's not clear whether they are including net revenue or gross revenue. If they are using net revenue their guidance has gone up a lot. "On Microsoft, positive earnings can only benefit Yahoo. This certainly strengthens Yahoo's arguments that it's worth more and there are signs of improving business and better margins." DEREK BROWN, ANALYST, CANTOR FITZGERALD "Seems like an incremental positive that they topped (Wall Street) consensus. Not sure where they came in relative to their guidance, but that said, the bar had been set fairly low by the company." "It doesn't seem to change in any way the current acquisition landscape. It's hard to see an indication that the trajectory of Yahoo's business has altered noticeably, and in that light there doesn't seem to be a compelling reason for Microsoft to alter their bid." RYAN JACOB, FUND MANAGER OF THE JACOB INTERNET FUND, LOS ANGELES, WHICH OWNS ABOUT 150,000 YAHOO SHARES BUT NOT ANY MICROSOFT SHARES "I really don't think that these results change the situation too much although it does increase the likelihood that Yahoo will be able to negotiate a more favorable price." "The numbers were a bit better than expected." "It's nice to know that Yahoo could put up decent results in what seasonally is a weak quarter." "They had a pretty solid quarter and raised guidance. It wasn't an extraordinary quarter. But it was good enough that in terms of the deal not much has changed." "If Yahoo had posted poor results it would have put them in a very difficult position to try and negotiate a higher price." "To be fair, I always thought a higher price was more likely. The question became really how much pressure Microsoft could put on Yahoo to complete a deal." "Most shareholders generally believe strategically the deal makes sense. They just feel a higher price would be appropriate given Yahoo's franchise value." "We feel at an absolute minimum, Microsoft will pay the original price, which is $31 on an adjusted basis, and we do think that there's a reasonably decent chance that that price will be a bit higher than that. That's our premise and it (Yahoo) is still one of our top positions today." ROSS SANDLER, ANALYST, RBC CAPITAL MARKETS "I think everyone is going to be modestly optimistic about Yahoo coming in at the upper end of the range on revenue and EBITDA. They also raised the full-year EBITDA guidance range by $50 million ... Their owned-and-operated sites' revenue were only up 18 percent year-over-year. We were expecting in the low-20s. Microsoft will be focused on what's going on with owned-and-operated sites revenue." "The fact they have beaten (in the first quarter) and have raised a bit (full-year guidance) means the value should go higher." (Reporting by Anupreeta Das in San Francisco; and Kenneth Li, Calvin Mankowski and Ellis Mnyandu in New York; and Muralikumar Anantharaman in Boston)

CEO says aiming to maximize value of Yahoo assets. "We are totally committed to maximizing the value of this asset," Yang told investors on a conference call to discuss first-quarter financial results. On the same call, President Susan Decker said it was "premature" to say whether Yahoo would reach a deal to turn over some part of the company's Web search advertising business to rival-turned-Microsoft-counterweight Google Inc. "It's premature to speculate on what options we may ultimately pursue or whether some form of arrangement might result," Decker said, referring to the test the company had announced two weeks ago of a Google Web search ad partnership. She emphasized that Yahoo aims to remain a significant player in the Web search market while also wringing the most it can in the near term over the revenue it generates from ads sold alongside its Web search services. Chief Financial Officer Blake Jorgensen said, as previously predicted in January, that the company had seen weakness in financial services, travel and retail advertising sales related to the U.S. economic weakness during the first quarter. (Reporting by Eric Auchard , Anupreeta Das and Daisuke Wakabayashi in San Francisco)

Samsung: cradle to grave symbol of South Korea. The Samsung Group is the country's largest conglomerate and has its hands in maternity wards and funeral halls, memory chips and supertankers as well as credit cards and life insurance. On Tuesday, the man who ran the group for over 20 years, Lee Kun-hee, said he was stepping down after being indicted for tax evasion and breach of trust. Lee's Samsung has been a constant in the lives of Koreans over the past two decades as the country moved to open democracy, emerged as one of the biggest economies in Asia and a global producer of high-end consumer goods. "People believe Samsung is a company that never fails, which is why to them the person who built up that group with his management skills, Lee Kun-hee, is thought to be god-like," said Kim Sang-jo, executive director of Solidarity for Economic Reform, which is calling for better corporate governance. Samsung, which means "three stars", is South Korea's best-known brand as well as its flagship firm for global success. At home and abroad it is an inescapable presence with a name emblazoned on televisions and mobile phones. Its chips power computers and handheld communications devices. It is one of South Korea's staunchest patrons of the arts and a global sponsor for the Olympics. The list of Samsung products and services is dizzying. It makes clothes and precision glass. It provides economic advice for the government. It runs hotels, a baseball team and the country's biggest amusement park. In South Korea, joining Samsung is said to make a person a better candidate for marriage. And the reclusive Lee family that runs the group is the aristocracy of the country's entrepreneur class. REFORMS The reforms Samsung unveiled on Tuesday are supposed to eventually divorce the Lee family from that control but skeptics doubt if South Korea's first family of commerce will ever relinquish its role at the firm it started in 1938. The Lee family holds a tiny share in the group but maintains its influence through a complicated network of cross shareholdings among group companies. At the top of the structure is unlisted Everland, an amusement park operator that serves as the de facto holding firm. Lee's son, Lee Jae-yong, seen as being groomed to take over, will step down from his executive post and work abroad for the group in another, unspecified role. Some say that Samsung was able to overtake rivals such as Sony in size because its centralized control allows the group to implement long-term policies instead of having to change course each quarter due to investors looking for quick gains. "The reform plan may have a negative impact on the group companies because Lee Kun-hee's resignation would dent the group's leadership and increase uncertainties around the management," said Choi Chang-ho, an analyst at Goodmorning Shinhan Securities. Others are not overly worried about a power vacuum, saying companies such as its flagship Samsung Electronics have developed a management team skilled at competing globally. Samsung said in a statement that more shake-ups are in store. But for now, chairman Lee still maintains a stake in the group and the complex web that allows him to keep power is not slated to be unraveled for several years. (Additional reporting by Marie-France Han and Lee Jiyeon; Editing by Keiron Henderson and David Fogarty )

U.S. crude futures surge to record above $119 a barrel. On the New York Mercantile Exchange at 11:56 a.m. EDT, May crude was up $2.02, or 1.72 percent, at $119.50 a barrel, trading from $116.85 to a record $119.74, moving past Monday's $117.83 record peak. (Reporting by Robert Gibbons )

Existing home sales fall 2 percent. The National Association of Realtors said existing home sales fell 2.0 percent to a 4.93 million-unit annual rate. Economists were expecting the pace to fall to 4.92 million units, off from the February rate of 5.03 million. The inventory of homes for sale swelled by 40,000 to 4.06 million homes, or a 9.9 months' supply at the current sales pace from 9.6 months in February. Meanwhile, the median national home price declined 7.7 percent from a year ago to $200,700. A separate government report on national home prices showed home values up about 0.6 percent in February from the prior month but down 2.4 percent from last February. Analysts were unmoved by the data that largely met their low expectations for the listless housing market. "It declined basically in line with what we were looking for -- we think sales still have a couple more months of declines left," said Adam York, an analyst with Wachovia Securities in Charlotte, North Carolina. "We are not really looking for a bottom until maybe the summer." Three regions across the nation saw a median home price decline, according to NAR data, while the Northeast saw a gain of 4.6 percent. The West saw a 14.7 percent drop in home prices from a year ago, NAR said. The drop in home values nationwide has pushed many borrowers toward foreclosure and upset lending standards in many markets. Of the homes for sale, 18 percent have negative equity and so are either in foreclosure proceedings or headed for a 'short sale' that will see the lender write off some of the original loan amount. "This has been a frustration of our members," said NAR chief economist Lawrence Yun. "Lenders have been dragging their feet (in approving short sales)." U.S. Treasury debt prices eased after the housing data showed a smaller-than-expected slide while the U.S. dollar extended gains versus the yen and U.S. stock indexes held losses on the session. Later this week, lawmakers on a banking committee of the U.S. House of Representatives are due to draft legislation that would allow the largest government homeowner aid program to buy more troubled loans. Expanding the Federal Housing Administration is seen by proponents as a crucial step in stabilizing prices and so put the brakes on the sliding market. (Additional reporting by Chris Reese in New York; Editing by Andrea Ricci )

Soaring fuel costs pummel airlines. AirTran Holdings AAI.N, parent of AirTran Airways, reversed its year-ago profit while JetBlue Airways ( JBLU.O ) also reported a loss, although it was smaller-than-expected and below the loss it posted in the same quarter a year earlier. The entire airline industry has been clobbered in the first quarter by soaring fuel prices, despite carriers' best efforts to control costs and stir up new revenue streams. The losses reported on Tuesday, which follow those reported last week by AMR Corp AMR.N and Continental Airlines CAL.N, put additional pressure on carriers to merge as a way to cut costs and boost revenue. Last week, Delta Air Lines ( DAL.N ) and Northwest Airlines NWA.N proposed a merger that would create the world's largest airline. UAL's loss was the largest reported by a major carrier for the quarter. But the airline said it plans to ramp up cost-cutting for 2008, trim domestic capacity and pull 30 aircraft from its fleet. "We consider the first quarter to be disappointing, though are impressed that the company is taking more aggressive steps than others in response to crushing fuel costs," said Jamie Baker, analyst at JP Morgan, in a research note. UAL shares fell 9 percent to what would be new 52-week closing low of $19.50 in Nasdaq trading on Tuesday. Airline shares were broadly weaker on Tuesday with the Amex airline index .XAL down more than 8 percent at its lowest level on record after Nymex crude oil futures CLc1 hit a new record high of $118.47 a barrel. STEEP LOSS UAL said it lost $537 million, or $4.45 per share in the first quarter, more the triple the loss of $152 million, or $1.32 per share, a year earlier. Wall Street analysts had expected the parent of the No. 2 U.S. airline to lose $3.41 per share, according to Reuters Estimates. UAL, which completed a massive bankruptcy restructuring in 2006, blamed the results on its consolidated fuel bill, which rose $618 million in the quarter. The company reported operating revenue of $4.71 billion, up from $4.37 billion a year earlier. UAL said it is targeting $200 million in nonfuel cost savings in addition to the $200 million announced earlier in the year. The cost cuts will require a reduction in UAL's salaried and management work force by 500 employees and its unionized work force by about 600 by the end of 2008. The 1,100 job cuts represent about 2 percent of the company's work force of more than 55,000, according to the UAL Web site. UAL said it would pull 30 aircraft from its operating fleet, 10 to 15 more planes that initially announced in March. UAL also is reducing capital expenditures by about $200 million from $650 million as previously planned and cutting domestic capacity by about 9 percent by the fourth quarter. "In this extraordinarily difficult environment, we recognize the pace of change needs to accelerate, and our actions today reflect just that," UAL Chief Executive Glenn Tilton said in a recorded message to employees. Other major airlines are implementing significant cost cuts. Delta, for example, said in March it would cut 2,000 jobs and scale back operations. In addition to these steps, airlines -- including United -- are aiming to boost revenue by charging higher fares, and adding new fees for items and services that used to be included in the price of a ticket. Most notably, some carriers have started to charge passengers to check a second bag. JetBlue announced its new fee to check a second bag on Tuesday. UAL ended the quarter with an unrestricted cash and short-term investment balance of $2.9 billion. Earlier on Tuesday, low-cost carrier AirTran said it lost $34.8 million, of 38 cents per share, in the first quarter, reversing a year-ago profit of $2.2 million, or 2 cents per share. The carrier recorded fuel costs of $268 million, up from $102 million a year earlier. JetBlue, meanwhile, posted a narrower-than-expected net loss of $8 million, or 4 cents per share, compared with a loss of $22 million, or 12 cents per share, a year earlier. AirTran shares were down 11 percent at $4.06 on the New York Stock Exchange. JetBlue shares were down 2 percent at $4.83 on Nasdaq. (Reporting by Kyle Peterson, John Crawley , Aarthi Sivaraman )

Oil must stay high if world to have enough supply. Three days of talks in Rome between producers and their customers drew broad agreement a weak dollar has pushed oil prices higher and that the cost of extracting more from the ground has soared. One thing the 60 or so energy ministers and dozens of industry executives struggled to agree was that the price, which hit a record of $119.74 a barrel on Tuesday, was too high. "The oil market is in a state of fear, if not panic," said Shokri Ghanem, head of Libya's National Oil Corporation, but he also said expensive oil was necessary. "Prices will have to stay high in the long term to encourage exploration and production." Producers and consumers alike were worried, but for different reasons. Producers were nervous about falling demand and consumers dreaded economic collapse. "Oil prices are clearly too high. We are not happy with the prices or the direction they're going in," said Jeffrey Kupfer, acting deputy secretary of energy for the United States, the world's biggest energy consumer. The International Monetary Fund has predicted the U.S. economy would enter recession this year and some fear high prices could cause global economic damage. "Definitely it will have some negative impact on economic growth -- that's for sure," said Nobuo Tanaka, executive director of the International Energy Agency, which represents consumer nations. AGREE ON COST, NOT PRICE When he arrived in Rome at the weekend, Tanaka said he wanted the International Energy Forum (IEF) to reach agreement the price was too high. A closing statement said ministers had expressed concern over "the current level of oil prices". An earlier draft had said "the current high level of oil prices". "The forum noted that oil prices should be at levels that are acceptable to producers and consumers to ensure global economic growth, particularly in developing countries." Consensus was more forthcoming about the impact of labor shortages in the oil industry and that a rally across the commodities complex has driven up the cost of new production. "There's definitely cost inflation. On that, there is a certain agreement, but what level is another question, but everybody is saying there's cost inflation. That is one reason for the high price," said Tanaka. If rising costs are one factor behind higher oil prices, the most topical issue is the weak dollar, which has encouraged investors to flock to some commodities as an inflation hedge. Iraqi Oil Minister Hussain al-Shahristani said the oil price was not as high as it seemed because it is measured in the U.S. dollar, which has hit record lows against other currencies. "It's not really so high that it's beyond the capacity of most countries to cope with it," he said. Producer countries need their revenues, mostly in dollars, to be high enough to finance investment in infrastructure. Ali al-Naimi, oil minister of leading exporter Saudi Arabia, has repeatedly said the world has enough oil in the near term. For the future, he said the world's reserves were adequate, but needed investment. "At its heart, this is not an energy resource issue, it is primarily an investment issue," Naimi said in a speech. (Additional reporting by Simon Webb , Svetlana Kovalyova and Barbara Lewis )

Citigroup officials look to HP for advice: report. Citigroup's top officials have been talking to their counterparts at HP, the FT said, citing people familiar with the talks. The talks have focused on IT issues and general strategy, the report added, quoting people close to the situation. HP faced several problems with its business around 2005 -- its PC business showed signs of weakness and its stock started suffering. Its then-Chief Executive Carly Fiorina was replaced by Mark Hurd, under whose leadership HP saw a sharp revival in its stock price built on solid market-share gains. Now officials at Citigroup, being led by Vikram Pandit, are seeing similarities between the situation at the ailing bank now and that at the IT company then, the report said, citing people close to the situation. Though Citigroup reported a $5.1 billion quarterly loss last week, investors seem to hope that Pandit is taking steps to eliminate credit problems, cut expenses and get the bank back on track. HP and Citigroup were not immediately available for comment. (Reporting by Aarthi Sivaraman , editing by Will Waterman)

TIMELINE: Key events related to Samsung Group probe. Following are key events related to the investigation: - November 5, 2007: A former head of Samsung Group's legal division, Kim Yong-cheol, accuses the conglomerate of operating a slush fund to bribe prosecutors, politicians and bureaucrats to quash investigations into the company's murky management structure. Samsung said the accusations were not true. - November 20: South Korea's financial watchdog Financial Supervisory Service says it has started a probe into Kim's allegation that Samsung used so-called "borrowed name accounts", or accounts used by the company but set up in the names of trusted employees, to stash secret funds. - November 23: South Korea's parliament approves an independent counsel investigate the allegations made by Kim Yong-cheol. - November 26: Kim says Samsung had used its subsidiaries to help create a 200 billion won ($202.2 million) slush fund. State prosecutors start investigation. In the first week, they ban Samsung Group officials from traveling abroad in order to face possible questioning, raid Samsung's brokerage unit, Samsung Securities ( 016360.KS ) and a data centre at Samsung SDS, the group's integrated IT services unit. - December 12: South Korea's financial watchdog says Woori Bank and brokerage Goodmorning Shinhan Securities had broken rules in setting up accounts for Samsung Group, giving credibility to Kim's claim of "borrowed name accounts". - January 10, 2008: The parliament-approved special counsel begins its investigation. In its first week, it raids an office of Samsung leader Lee Kun-hee, the homes of seven other executives, Samsung's Seoul headquarters and Lee's residence. - February 14: The special prosecutor counsel raids the headquarters of group flagship Samsung Electronics ( 005930.KS ). - February 28: The special prosecutor counsel questions Chairman Lee Kun-hee's son, Lee Jae-yong. - April 2: Lee Kun-hee's wife questioned on allegations she tapped into slush fund to buy artwork. - April 4: Group chief Lee questioned by special prosecutor. - April 17: Special prosecutor indicts Lee Kun-hee for tax evasion and breach of trust. Clears Lee of bribery charges. Prosecutor also indicts nine other top executives for helping to hide 4.5 trillion won ($4.53 billion) in Lee's assets and working secretly to transfer Lee's wealth to his children. - April 22: Lee Kun-hee says to step down as group head. (Reporting by Rhee So-eui, editing by Jon Herskovitz and Keiron Henderson)

Yum's China growth pushes 1st-qtr profit up. Shares at Yum ( YUM.N ) rose 3.8 percent after it said first-quarter net income jumped to $254 million, or 50 cents per share, from $194 million, or 35 cents per share, a year earlier. Excluding a gain of 8 cents per share from the sale of a minority interest in KFC Japan and other items, the per-share profit was 42 cents. Analysts, on average, looked for 40 cents, according to Reuters Estimates. Worldwide sales at stores open at least one year were up 4 percent, including 12 percent growth from mainland China. Yum raised its forecast for 2008 per-share earnings from $1.85 per share to $1.87 per share, excluding special items that would boost results by 6 cents per share. Shares rose to $39.95 in extended trade, after closing down 1.5 percent to $38.49 on the New York Stock Exchange. (Reporting by Lisa Baertlein ; editing by Jeffrey Benkoe)

U.S. crude roars above $119 on dollar, supply. "The trend is up and the market didn't break down when it moved lower in the morning, and you have the weak dollar and the supply disruptions are in the mix," said Eric Wittenauer, analyst at Wachovia Securities. On the New York Mercantile Exchange at 12:17 p.m. EDT, May crude was up $1.96 or 1.67 percent at $119.44 a barrel, trading from $116.85 to a record $119.74, surging past Monday's $117.83 record peak. The May contract expires on Tuesday. In London, the front-month June Brent crude contract was up $1.81 or 1.58 percent at $116.24 a barrel, trading from $113.94 to $116.75. Traders in London said buy stops were triggered near midday when prices in New York surged above $119. NYMEX May RBOB was up 3.60 cents or 1.21 percent at $3.0151 per gallon, trading from $2.9556 to to a record $3.02, eclipsing Monday's $3.0040 record peak. The RBOB crack spread on Tuesday was at $6.97 after ending at $7.64 on Monday. May heating oil was up 2.49 cents or 0.75 percent at $3.3363 a gallon, trading from $3.2806 to a record $3.35, surpassing Monday's $3.3309 peak. The heating oil crack spread on Tuesday was at $20.72 versus $21.60 on Monday. The euro rallied against the dollar and traded above $1.60 for the first time since its 1999 inception amid growing expectations the European Central Bank's next move may be a hike in benchmark interest rates. Royal Dutch Shell ( RDSa.L ) said on Tuesday it stands by its previous statement that 169,000 barrels per day of Nigerian output were shut, responding after Nigeria's oil minister said the figure was too high. Management and trade union officials at the Grangemouth refinery in Scotland were to meet on Tuesday for talks to avoid a strike planned at the weekend. Refinery owner Ineos already started closing one of the refinery's three crude processing units. China's implied oil demand rose 8 percent in March from the year-ago period, the fastest rate in 19 months, official data showed on Tuesday. Demand rose 6.2 percent in the first quarter. Fog stopped Houston Ship Channel traffic on Tuesday morning after ship pilots determined visibility had dropped to unsafe levels, the U.S. Coast Guard said. (Reporting by Robert Gibbons ; Editing by David Gregorio )

New York Times is not for sale: Sulzberger Jr.. "This company is not for sale," he said at the Times' annual shareholder meeting, calling recent media reports suggesting otherwise "ill-informed." Speculation over a sale of the publisher of the namesake paper, as well as the Boston Globe and About.com, has dogged the company for years. Media interest in the idea has been resurrected as its stock shed close to 20 percent in the last year and its flagship Times faces new competition in U.S. political news from a Rupert Murdoch-owned Wall Street Journal. New York City Mayor Michael Bloomberg, founder of the Bloomberg LLC financial news and data service to consider, has been cited as a potential suitor. Newsweek reported this week that his close associates have urged him to consider a bid, but Bloomberg shot down that idea on Monday. "I am not going to go into the newspaper business," Bloomberg told reporters when asked about the Times. The Times' sliding stock price and a steady decline in ad revenue has sparked anger among its outside investors, some of whom have publicly blasted management for poor performance. Last month, the Times ended a proxy battle with a dissident shareholder group led by hedge fund Harbinger Capital Partners by agreeing to support two outside nominees to its board. Shareholders on Tuesday approved the slate, including dissident nominees Scott Galloway of investment firm Firebrand Partners, who led the battle with Harbinger, and James Kohlberg, chairman of private equity company Kohlberg & Co. "We are delighted to welcome the two board members who came to us through that process," Sulzberger said of Galloway and Kohlberg. All the directors got approval from at least 77.7 percent of the shares voted, Times spokeswoman Catherine Mathis said. Times shares rose to $19.90 in after-hours trading after falling 64 cents to close at $19.61 on the New York Stock Exchange. (Editing by Maureen Bavdek/Andre Grenon)

CIT sells $1.5 billion of stock. The offerings dilute the holdings of existing shareholders, and CIT shares were off $1.75, or 13.7 percent, to $10.99 in morning trading on the New York Stock Exchange. Like many other finance companies that cannot borrow from the Federal Reserve, CIT has been scrambling to raise cash. It has said it agreed to sell more than $5 billion of assets and loan commitments, and has identified another $2 billion of loan assets it may finance or sell. "We are surprised by the timing, particularly given the company's progress in improving its liquidity position through asset sales," wrote Sandler O'Neill & Partners LP analyst Michael Taiano. CIT said it sold $1 billion of common stock, comprising 91 million shares at $11 each. It also sold $500 million of preferred stock carrying an 8.75 percent dividend and convertible into CIT stock at $12.65 per share. The company said net proceeds total about $1.44 billion. It said it may increase both offerings by 15 percent, potentially increasing gross proceeds to about $1.73 billion. CIT on Thursday posted a $257.2 million first-quarter loss, slashed its dividend 60 percent and said it may sell its railcar leasing business to raise cash. CIT has said it has enough cash to meet its obligations this year. Last month, however, it drew down its $7.3 billion of bank credit lines. Taiano said the capital raising could foreshadow sales of CIT's remaining subprime mortgage and student loan portfolios. "Assuming those assets would be sold at a considerable discount, we believe management may be positioning the company to absorb a sizable charge to its capital base," he wrote. A CIT spokesman was not immediately available for comment. Credit Suisse analyst Moshe Orenbuch on Tuesday lowered his 2008 profit forecast for CIT to $1.80 per share from $2.75, and said the offerings are about 25 percent dilutive. New York-based CIT said it intends to use net proceeds from the stock offerings for general corporate purposes, including payment of $8 million of preferred stock dividends and $23 million of interest on junior subordinated notes. Citigroup Global Markets Inc, JPMorgan, Lehman Brothers Inc and Morgan Stanley arranged the offerings, CIT said. (Editing by Mark Porter and Maureen Bavdek)

Wyeth profit hurt by generic, but beats forecast. Wyeth earned $1.2 billion, or 89 cents per share, compared with $1.25 billion, or 92 cents per share, a year earlier. Excluding special items, the drugmaker earned 94 cents per share. Analysts' average forecast was 90 cents, according to Reuters Estimates. "The earnings number was solid and came in above expectations; it's a good beginning for the year," said David Katz, chief investment officer of asset manager Matrix Asset Advisors in New York. Global revenue rose 6 percent to $5.71 billion, above the average Wall Street forecast of $5.49 billion. Excluding the favorable impact of the weak dollar, revenue rose just 1 percent. Wyeth reaffirmed it expects earnings to fall as much as 5 percent this year due to generic competition for Protonix and possible generic competition for its $3.5 billion-a-year Effexor anti-depressant. "Wyeth historically has been conservative, not raising its yearly estimates even when beating quarterly forecasts, and that seems to be the case now," Katz said. The Madison, New Jersey-based drugmaker said it expects Effexor sales, which grew 15 percent in the first quarter to $1 billion, to be comparable for the full year to those seen in 2007. Effexor sales will suffer later this year, Wyeth said, from competition with Wyeth's own recently approved newer depression drug, Pristiq, and the arrival in Europe of generic forms of Effexor. U.S. regulators in late February approved Pristiq, a derivative of Effexor the company aims to build into a major brand before Effexor loses its U.S. patent protection in 2010 and faces generic competition. $1 BILLION POTENTIAL "We think Pristiq, as a treatment for depression, has potential for sales exceeding $1 billion" annually, company Chief Financial Officer Greg Norden said in an interview. Some analysts have dismissed Pristiq as a "me too" drug, with few distinguishing characteristics and modest sales potential. But Norden said it may be simpler to use because most patients would take the same 50-milligram dose. To encourage patients to use it, Wyeth said on Tuesday it will price Pristiq at a 20 percent discount to Effexor. India's Sun Pharmaceutical Industries Ltd is expected to begin shipping tablet forms of Effexor to U.S. drugstores in the second half of the year. But Wyeth said the tablets, because of their different formulation from Effexor, will not be rated as automatic substitutes for its brand. Protonix had been one of Wyeth's biggest products, with annual sales of more than $1.7 billion, until Israel's Teva Pharmaceutical Industries Ltd introduced its generic version of the ulcer drug in December despite an unresolved patent dispute with Wyeth. In late January India's Sun aggravated Wyeth's pain by launching its own copycat version of Protonix in the United States. Consequently, Protonix sales fell by two-thirds in the first quarter, to $159 million. But other big Wyeth drugs had strong sales gains, including Enbrel for arthritis, Prevnar to prevent childhood infections, and the Premarin line of female hormone replacement drugs. Prevnar sales jumped 14 percent to $706 million, while sales of Enbrel, which Wyeth markets outside the United States and Canada, soared 36 percent to $606 million despite strong competition from similar products sold by Johnson & Johnson and Abbott Laboratories Inc. Premarin sales rose 15 percent to $276 million, continuing to recover somewhat from long-standing concerns that the drugs can increase the risk of breast cancer and stroke. Shares of Wyeth were down 45 cents, or 1 percent, at $43.76 in midday trading on the New York Stock Exchange amid a moderate downturn for the drug sector. (Reporting by Ransdell Pierson; Editing by Brian Moss and Gerald E. McCormick)

The worst is over for stocks: S&P's Stoval. Sam Stovall, chief investment strategist and chairman of the investment policy committee at Standard & Poor's, reiterated a forecast by his firm calling for the benchmark S&P 500 .SPX to finish 2008 at 1,560, about 5 points shy of the index's record close set in October 2007. "We do have a good likelihood of retracing our steps at least up to the 1,560 level," he told an investment outlook teleconference. The target implies a projected 13.1 percent increase for the S&P 500 index from its current level of around 1,380. "Much of the decline we've experienced is likely over in our opinion. We believe the worst is over and we could see the market work its way higher." Although the U.S. economy will likely enter recession in the first half of 2008, the downturn, he said, will likely be "milder" and similar to the 1990 recession. The recent market pullback, he said, will come down in history as "a very sharp correction but not (the start of) a new bear market." Stovall said his optimism on the outlook for stocks reflects both the Fed's aggressive moves to cut interest rates and "how quickly Congress passed the tax stimulus package, which we believe will serve as a sugar rush for many consumers." Even if the U.S. economy enters a recession, the rest of the world will not likely suffer a similar fate, underpinning prospects for exports to fuel corporate profitability, he told the teleconference. "We're convinced we'll see good earnings recovery in 2008. Maybe it might not end up being as robust as low to mid-teens but we believe we will be on the recovery track from the 6 percent decline in earnings experienced last year," said Stovall. Also as many companies in the financial sector have taken write-downs for losses stemming from the mortgage meltdown, some of those write-downs are likely to prove to have been unnecessary, Stovall said, meaning they would be "added back to earnings and so as a result we could see by the end of the year an improvement in the overall earnings picture." On sector picks, Stovall said his team is gravitating toward cyclical plays and has begun paring back from its defensive leanings. "Right now we have an overweight recommendation on consumer staples and materials, but we recently upgraded our recommendations on the cyclical areas -- consumer discretionary, financials, and technology -- to market weight from underweight; and we recently underweighted health care and utilities." The Fed has cut its benchmark lending rate 3 percentage points since mid-September to 2.25 percent. Wall Street expects the Fed to cut rates again at its next policy meeting next week. (Reporting by Ellis Mnyandu; Editing by Leslie Adler)

Housing to stay on downward trend: Cemex. Cemex ( CX.N ) ( CMXCPO.MX ), the world's third-largest cement maker, expects demand in the U.S. residential sector for its cement to drop this year by some 24 percent, planning and finance chief Hector Medina told an analysts' conference call. Medina reduced his 2008 forecasts for cement and concrete sales volumes for the U.S. market, where Cemex increased its exposure last year with its $16 billion takeover of Australia's Rinker. "In 2008, we now expect our (overall U.S.) cement volume to decline by about 9 percent, our ready-mix volume to decline by about 13 percent and our aggregates volume to decline by about 10 percent," Medina said. In January, Medina forecast cement volumes to drop 7 percent, ready-mix concrete to fall 9 percent and aggregates -- materials like sand and gravel -- to decrease 6 percent. "This will of course have an impact on our (EBITDA) margins in the United States," Medina added, also blaming higher energy and transportation costs. Cemex, which operates in more than 50 countries, is facing a slump in residential construction following a subprime crisis that is pushing the United States into a recession. For Cemex, which competes globally with Switzerland's Holcim ( HOLN.VX ) and France's Lafarge ( LAFP.PA ), the fall in housing construction has been particularly severe in its high-growth markets such as Florida. MAINTAINING EBITDA But Monterrey-based Cemex said it was standing by its forecast of full-year EBITDA of around $5.6 billion despite the U.S. market, amid skepticism from analysts. Credit Suisse analyst Marcelo Telles said he expected Cemex's EBITDA to reach $5.18 billion this year. The company cited cost benefits due to Rinker, aggressive cost-cutting across the company, recent cement price rises, booming Eastern European operations and a strong euro. "We do feel we are on track to reach 5.6 billion (dollars), everything considered," said Chief Financial Officer Rodrigo Trevino, who declined to say if Cemex would make new price hikes this year. The company also expects Mexico's delayed government infrastructure program to help EBITDA from the third quarter. On Monday, Cemex posted an 18 percent rise in first-quarter net profit to $470 million, slightly above analysts' expectations, despite the U.S. housing slowdown. The earnings were helped by Cemex's sale of its 9.5 percent stake in local telecoms company Axtel ( AXTELCPO.MX ) in late March for $257 million. Cemex said its January-to-March revenues rose 26 percent to $5.4 billion. However, the higher net profit also came because of the inclusion of the Rinker operations. Cemex acquired Rinker in June last year and began including those operations in the third quarter of 2007. Shares of Cemex rallied more than 2 percent on the results but slipped back in morning trading, rising 0.52 percent on Tuesday to 29.04 pesos. Its New York traded stock moved up 0.47 percent to $27.51.

FACTBOX: A look at South Korea's powerful Samsung Group. Following are some key facts about the Samsung Group and the Lee family that founded and runs it: THE BEGINNING Samsung was launched in 1938 when Lee Byung-chull, the son of a wealthy landowner who was in the rice milling business, opened a trading company. To increase revenue, Lee added a trucking business but Samsung, which means "three stars", did not take off until during and after the 1950-1953 Korean War when Lee added a textile company, started his country's first major sugar refinery and built a powerful trading network. THE GREAT EXPANSION In the 1960s and 1970's Lee adds a dizzying array of companies to the group that included the Shinsegae department store, the JoongAng Ilbo daily newspaper, a shipbuilder, a chemical company and most importantly Samsung Electronics. Several firms were later spun off. During this period, the family-run conglomerates known as "chaebol" formed a close alliance with the government run by authoritarian President Park Chung-hee to lift the economy. Samsung was an also-ran at this time with Daewoo, Hyundai and Lucky Goldstar, now known as LG, at the top of the pack. THE TRANSITION Lee Kun-hee, after being groomed for the top spot for years, officially took over when his father died in 1987. Father and son both went to university in Japan. The younger Lee changed the focus of the company from one that mostly produced mass quantities of lower-end goods to one that would use innovation and superior goods to build a respected brand name. Under his reign, Samsung became the country's largest conglomerate with about 60 affiliates, accounting for about one fifth of the country's exports. Samsung Electronics became the world's biggest maker of memory chips. The group also includes Samsung Heavy Industries, the world's No. 2 shipbuilder, and South Korea's biggest life insurance company Samsung Life. THE NEXT GENERATION Lee Kun-hee's son, Lee Jae-yong, began working in a Samsung Group division in 1991 and has spent many years with the flagship Samsung Electronics. Considered as the heir to throne, the group announced on Tuesday he would step down from his job as chief customer officer at Samsung Electronics and work with the group overseas. In 2005, a Seoul court found two former Samsung executives guilty of conspiring in a 1996 deal to help Lee Jae-yong and other children of Lee Kun-hee buy a majority stake in Samsung Everland, which serves as the group's de facto holding firm. (Reporting by Rhee So-eui and Jon Herskovitz , editing by Jonathan Thatcher & Ian Geoghegan)

McDonald's U.S. sales show consumer pullback. The March U.S. sales drop sent McDonald's shares 1.3 percent lower in afternoon trade and dragged down stocks in the fast-food sector, which had been somewhat insulated from the U.S. economic slowdown as cash-strapped consumers moved to cheaper restaurants. Shares of fast-food rival Burger King Holdings Inc BKC.N fell 4 percent, while Yum Brands Inc ( YUM.N ) and Wendy's International WEN.N each shed just over 2 percent. Janna Sampson, co-chief investment officer at Oakbrook Investments in Lisle, Illinois, said McDonald's usually posts the industry's strongest numbers and noted that company executives said it gained market share during the first quarter. "That doesn't bode well for the other guys," Sampson said. McDonald's said sales at its U.S. restaurants open at least 13 months rose 2.9 percent in the first quarter but fell 0.8 percent in March. Overall same-store sales rose 3.3 percent in the 2007 fourth quarter. The March decline "certainly speaks to a challenging industry sales environment and a modest deceleration at (McDonald's)," Goldman Sachs analyst Steven Kron said in a client note. The world's largest restaurant chain operator posted net income of $946.1 million, or 81 cents per share, for the first quarter, up from $762.4 million, or 62 cents per share, a year earlier. Analysts, on average, had forecast 70 cents per share, according to Reuters Estimates. Revenue rose 6 percent to $5.61 billion. Analysts had been looking for $5.55 billion. Same-store sales rose 7.4 percent in the quarter, fueled by international results that outpaced analysts' expectations. Same-store sales rose 11.1 percent in Europe and 9.4 percent in the Asia/Pacific, Middle East and Africa segment. Tight cost controls also helped boost the first-quarter results. Despite the March sales figures and concern that the weakening U.S. economy is starting to hurt McDonald's, the stock is still a good investment relative to others in the restaurant sector, said Dave Kolpak, analyst at Victory Capital Management. "There's no question that it is affecting its business, but we as investors look at McDonald's relative to other investment opportunities and we see McDonald's gaining market share at an impressive pace, with people trading down from casual dining." Victory owns 1.6 million McDonald's shares and has assets of $62 billion under management. For April, McDonald's forecast a 2 percent to 2.5 percent increase in U.S. same-store sales. It forecast a 5.5 percent to 6.5 percent increase in European same-store sales, and a 6.5 percent to 7.5 percent increase in the Asia/Pacific, Middle East and Africa region. Shares of Yum -- the operator of the KFC, Pizza Hut and Taco Bell chains -- were down 93 cents to $38.14, Burger King was off $1.13 to $27.36, and Wendy's fell 55 cents to $24.75. Through Monday, McDonald's shares had risen 21 percent over the past year. (Reporting by Brad Dorfman and Lisa Baertlein, editing by Maureen Bavdek and John Wallace)

Samsung chief to step down; sorry for tax scandal. In a shock announcement, Lee Kun-hee, 66, also apologized for the scandal which led to the indictments of nine other senior executives. But analysts pointed out his family will still control the country's largest conglomerate. "I will step down from the Samsung chairman position today. I am saddened as there is still much to do and a way to go, but I will leave with all the faults of the past," an expressionless Lee said in a brief statement broadcast on national television. The group will dismantle its powerful strategic planning office, which critics say is an opaque organization able to wield influence across some 60 affiliates, including flagship company Samsung Electronics Co Ltd ( 005930.KS ), a world leader in computer memory chips and flat display screens. "I don't see anything more than a change of people in charge, there's no change at all in the fact that (the Lee family) will remain the owner," said Oh Suk-tae, an economist at Citibank. Lee's son, Lee Jae-yong, considered as being groomed for the top slot at the group, is stepping down from his executive post within South Korea and will go abroad to serve in another role. Shares in group affiliates such as Samsung Securities Co Ltd ( 016360.KS ) and Samsung Construction & Trading ( 000830.KS ) fell by as much as 4 percent on the news, that stunned markets and a public fascinated by the reclusive Lee, one of South Korea's richest men and most revered business leaders. Listed Samsung group SAGR.UL firms account for 20 percent of the total market capitalization on the main board of the South Korean bourse .KS11 , according to its data. A special prosecutor in January launched a probe into corruption allegations after a former top legal executive at the group said some of its top management hid money and kept a slush fund to bribe politicians, prosecutors and officials. The prosecutor found no evidence to support the bribery allegation. If found guilty of tax evasion Lee could serve from five years to life in jail. South Korean conglomerates, known as chaebol, powered South Korea from the ashes of the 1950-53 Korean War to become Asia's fourth-largest economy, but have been accused for years of having impenetrable management structures. Critics say few changes have been made over the years at the family-run business groups, despite a number of high-profile convictions of their leaders. In contrast, pro-business groups have voiced concerns that the probe has delayed important management decisions at Samsung. (Additional reporting by Kim Yeon-hee, Marie-France Han, Yoo Choonsik , Lee Jiyeon and Rhee So-eui, editing by Jonathan Thatcher & Ian Geoghegan)

AT&T profit rises on wireless sales. AT&T's first-quarter profit rose 21.5 percent to $3.46 billion, or 57 cents per share, from $2.85 billion, or 45 cents a share, in the same quarter a year earlier. Profit before items, such as merger-related costs and severance charges for recently announced job cuts, totaled 74 cents and matched Wall Street expectations, according to Reuters Estimates. Quarterly revenue rose 6.1 percent to $30.7 billion, compared with $30.6 billion expected by analysts. AT&T shares were up 10 cents to $37.69 on the New York Stock Exchange. But Stifel Nicolaus analyst Christopher King said he had expected stronger results from AT&T's wireless business. "Overall, I think it was largely in line, but not a great quarter. And wireless net adds were less than expected," he said. AT&T, the exclusive U.S. carrier for Apple Inc's ( AAPL.O ) iPhone, said it added 1.3 million net wireless subscribers in the quarter, compared to an average estimate of 1.32 million according to seven analysts polled by a Reuters reporter. King had forecast 1.4 million new subscribers. He also pointed out that net additions of postpaid users, or those who pay monthly subscriptions instead of prepaid fees, rose by 705,000 subscribers, just 3.7 percent higher than in the year-ago quarter. Postpaid subscribers are considered valuable as they tend to bring in more revenue per user. Analysts have said an increase in consumers with credit concerns -- amid rising unemployment and bankruptcies -- may be forcing more first-time subscribers to sign up for prepaid services. "We're going to have to see what Verizon says next week. But I'm certainly a little concerned about the wireless side. That number of 705,000 in postpaid is essentially flat year on year," King said. CONSUMER LINES Both AT&T and rival Verizon Communications Inc ( VZ.N ) have banked on mobile phones for growth as traditional home phone users decline. AT&T said primary retail consumer access lines fell 6.2 percent year-on-year, compared to a 4.9 percent decline in the fourth quarter. Analysts say a weaker U.S. housing market and increasing foreclosures, in addition to a general consumer shift to wireless services and growing competition from cable services, may be accelerating that decline. AT&T, which also sells high-speed Internet and video services to retain customers and compete with cable providers, said consumer and corporate high-speed Internet connections rose 13.9 percent from a year earlier to 14.6 million. Subscribers to its advanced, U-verse TV service rose to 379,000, a net gain of 148,000 for the quarter, and the company said it was on track to sign up more than 1 million by the end of 2008. AT&T was formed through a series of mergers including SBC Corp and BellSouth, and analysts have said savings from those mergers has also been boosting its earnings growth in the past few years. The company said operating cost savings following the BellSouth and AT&T Corp merger totaled around $3.9 billion in 2007, and that it expects such savings to grow by more than $2 billion in 2008. AT&T said last Friday that it would cut its work force by 1.5 percent, or about 4,600 jobs, on top of a three-year plan to cut 10,000 jobs announced late last year. (Reporting by Ritsuko Ando; Editing by Derek Caney )

Analysts cut Bank of America '08 earnings estimates. "As declining housing prices continue to weigh on all aspects of the economy, deteriorating credit quality is reverberating through bank earnings as provisions and charge-offs rise," Whitney said in a research note to clients. On Monday, Bank of America said it expects earnings this year to take an "upward trajectory," even as it posted weak quarterly results, adding that it would not change its "dividend philosophy" but could review it if the environment got "noticeably worse." Punk Ziegel's Bove, who rates the stock a "buy," said the bank's margins, loans and net interest income were rising at above average rates, adding that it was well capitalized, very liquid and its dividend appeared to be safe. Bove also said it was likely that the excess reserves created by the bank would be reduced and, at that time, its earnings would move somewhat higher. David Hilder of Bear Stears also maintained his "outperform" rating on the stock, saying the bank had a premiere national retail and commercial banking franchise, and an attractive valuation. Shares of the bank were down 56 cents at $37.05 in morning trade on the New York Stock exchange. *Operating earnings estimates (Reporting by Ramya Dilip in Bangalore; Editing by Amitha Rajan)

U.S. gasoline, diesel prices hit new records. The national average price for regular, self-service gasoline is up 64 cents from a year ago, the federal Energy Information Administration's said in its latest survey of service stations. Pump prices are rising because of high crude oil costs, which on Monday climbed to a record $117.83 a barrel at the New York Mercantile Exchange. The price of crude oil accounts for about 70 percent of the cost for making gasoline. The EIA's weekly survey showed gasoline was again the most expensive on the West Coast at $3.73 a gallon, up 7.2 cents. San Francisco had the highest city price at $3.86, up 4.5 cents. The Gulf Coast states had the cheapest regional price at $3.41 a gallon, up 12.6 cents. Cleveland had the lowest city price, up 7 cents to $3.36. As fuel prices roar to successive record highs, more Americans are planning to cut back on driving and buy fewer gas-guzzling vehicles, according to a consumer group survey released on Monday. U.S. households spent more than $100 billion on gasoline during the first quarter of this year, more than double the $40 billion spent in the same period just six years ago, said the Consumer Federation of America. "That's a huge bite out of the household budget," said Mark Cooper, CFA's research director. "People will use less gasoline." Meanwhile, two U.S. lawmakers on Monday asked the White House to create a special Justice Department task force to examine possible fraud and manipulation of oil and natural gas markets. The lawmakers said supply and demand conditions can't explain current record oil prices, and suggested investments in the energy markets by speculators were at fault. Separately, the weekly price for diesel fuel jumped 8.4 cents to a record $4.14 a gallon, up $1.29 from a year ago, the EIA said. Average diesel fuel prices remained above $4 a gallon in every region of the country. The central Atlantic states had the most expensive diesel at $4.37 a gallon, up 10.4 cents. The Gulf Coast region had the cheapest fuel at $4.08, up 8.5 cents, the EIA said. The survey conducted for the CFA found that 60 percent of respondents said rising gasoline prices caused them much or some hardship, with 27 percent reporting much hardship. As a result, 45 percent of those surveyed said they were driving less compared with a year earlier, while only 10 percent said they were driving more. Higher gasoline costs will dramatically change the types of vehicles consumers buy in the future, according to the CFA. Forty-two percent said they intended to purchase vehicles with average fuel economy of more than 30 miles per gallon, compared with the median for current vehicles of 24 mpg. (Editing by Christian Wiessner )

Yahoo CFO not opposed to Microsoft, just its offer. In an interview with Reuters, Jorgensen said its first-quarter results were "right on track" despite having to deal with the distraction of Microsoft's offer. "We are not opposed to a deal with Microsoft. What we are opposed to is seeing it at a value that discounts the underlying value of the company," Jorgensen said moments after the company announced its first-quarter results. Yahoo and Microsoft are in a stand-off over Microsoft's $43 billion bid to acquire the company. Yahoo has said Microsoft's unsolicited offer undervalues the company, while Microsoft has said its offer is full and fair. (Reporting by Eric Auchard ; Editing by Braden Reddall )

Yahoo deal overshadows Microsoft earnings, forecast. Microsoft is slated to report its fiscal third-quarter results on Thursday with Wall Street analysts expecting a fall in profit from a year earlier, when the company booked $1.6 billion in revenue deferred from a quarter earlier because of delays to its Windows and Office upgrades. It will also provide an outlook for its coming fiscal year starting in July, offering investors clues on how concerned the world's largest software maker is about an economic downturn sapping technology spending. "I would expect that Microsoft will factor in some (economic) weakness into their numbers," said Sid Parakh, analyst at McAdams Wright Ragen. The company has said it expects revenue to grow more than 10 percent next year. Analysts, on average, are forecasting Microsoft's fiscal 2009 earnings to grow an estimated 12 percent to $2.10 a share on revenue of $66.46 billion, a projected increase of 10 percent, according to Reuters Estimates. The caveat to any projections made by Microsoft is that an acquisition of Yahoo would make previous forecasts obsolete. The two are in a stand-off over Microsoft's unsolicited $43 billion offer to buy Yahoo. Microsoft has refused to lift its stock-and-cash price, even as Yahoo's board of directors has said the offer undervalues the Web pioneer. So Microsoft's results should play second fiddle to the takeover battle. "There isn't going to be a lot of things that pop out of the blue so the focus is going to be on Yahoo and the online business especially given the magnitude of the deal," said Parakh, who has a "buy" rating on Microsoft with a 12-month price target of $40. This week could bring some progress in breaking the deadlock between the two companies. Yahoo reports quarterly results on Tuesday and the Microsoft-imposed deadline on Yahoo to negotiate or face a proxy fight expires on Saturday. Microsoft Chief Executive Steve Ballmer, speaking earlier on Tuesday in Morocco, said Yahoo's results will not affect the company's view that its offer remains "full and fair." STRONG FUNDAMENTALS Fundamentals surrounding Microsoft's core businesses remain strong. Worldwide shipments of personal computers in the March quarter rose between 12 percent and 15 percent, according to research firms IDC and Gartner, boosted by strong growth in emerging markets. Its Windows operating system, which runs on more than 90 percent of the world's PCs, has been helped by strong sales in emerging markets like Brazil, Russia and China. Since 60 percent of sales come from overseas, Microsoft has said it is partially shielded from a weak economy is North America. "The installed base of PCs continues to grow especially in emerging markets and Microsoft is in a position to benefit huge," said Todd Lowenstein, co-portfolio manager at HighMark Capital Management's Value Momentum Fund. Robust computer sales should also lift revenue at Microsoft's Office business. However, sales growth at the Windows and Office division could look less impressive when compared with last year's inflated figures, which factored in coupons issued to consumers affected by development delays. For the quarter ended in March, analysts expect fiscal third-quarter earnings of 44 cents per share, on average, down from 50 cents a year earlier, on revenue of $14.5 billion, according to Reuters Estimates. The results follow strong earnings from rivals Google Inc ( GOOG.O ) and International Business Machines Corp ( IBM.N ) in a sign that technology and advertising spending held up in the face of a weakening U.S. economy. Aside from its two main businesses, Microsoft is expected to post a profit gain in its server and tools division as well as its entertainment and devices division, which is home to its Xbox 360 game console business. Microsoft's online services business is likely to post another quarter of losses, reinforcing its argument that an acquisition of Yahoo may accelerate its efforts to improve the division's performance. Lowenstein, whose fund owns 456,000 Microsoft shares, said the core software business is on solid footing but its move to acquire Yahoo could prove to be a distraction. "We're worried about Microsoft (making matters worse by diversifying away from its core business) and doubling down on a tough business where Google is so strong," Lowenstein said. (Editing by Braden Reddall )

JetBlue Airways posts narrower loss. Net loss for the quarter was $8 million, or 4 cents per share, compared with a net loss of $22 million, or 12 cents per share, in the same period last year. Analysts on average had forecast a per-share loss of 7 cents, according to Reuters Estimates. Operating revenues totaled $816 million, a 34 percent jump. Operating expense per available seat mile increased 12 percent year-over-year to 9.5 cents. Excluding fuel, unit costs fell 0.2 percent to 5.8 cents. "We are pleased with our strong unit revenue performance and cost discipline during the quarter," Dave Barger, JetBlue's chief executive, said in a statement. Barger said the airline continues to see healthy demand and is taking steps to counter high fuel prices, which were up 40 percent at the company last quarter compared to the same period in 2007. "We have further reduced our 2008 capacity growth to three to five percent by aggressively managing our flight schedule after the peak summer travel period," Barger said. "We intend to make further adjustments to our network as necessary." On Tuesday, JetBlue joined other carriers in adopting a new checked bag policy. Customers can check one bag at no charge but a second one will cost $20, effective for travel on or after June 1. (Reporting by John Crawley , editing by Gerald E. McCormick and Dave Zimmerman)

Fiat could look for new China partner for Jeep: CEO. Chrysler aims to produce over 100,000 new Jeep models in China, in a move that is key to Fiat's goal of selling 300,000 vehicles annually in China by next year. Fiat and Chinese automaker Guangzhou Automobile Group ( 601238.SS ) have a joint venture called GAC-Fiat to produce Fiat cars in China. "In China we have a good partner, and we have the possibility to use a second one to develop Jeep," he said. Marchionne said Chrysler is not currently in talks with a partner for Jeep, but added that "there have been a number of expressions of interest." (Reporting by Jennifer Clark; editing by James Mackenzie )

Most economists see Fed scaling back bond buys by year-end: Reuters poll. Of 48 economists who answered a poll question on Friday about when they expected the Fed to cut back on the size of its debt purchases, 42 said they expected this by the end of 2013. Of those, 21 expect reduced purchases to be announced during the third quarter of the year, with 19 specifying the Fed's September policy meeting. The Fed is currently buying $85 billion per month of Treasuries and mortgage-backed securities in an effort to hold interest rates at very low levels and spur employment growth. The central bank has said the duration of the program is open-ended. Speculation over when the Fed might start to pare back its bond buying has roiled financial markets recently. Fed Chairman Ben Bernanke last month stoked market speculation when he said a decision to pare the Fed's current pace of bond purchases may happen at one of the Fed's "next few meetings" if the economy looked set to maintain momentum. Of 49 economists who responded to a question about when the Fed would completely halt bond purchases, 42 said they expect this by mid-2014. The remaining 7 economists expect the program to end in the second half of 2014 or the first half of 2015. The median of forecasts from 34 economists was for the Fed to purchase a total of $1.225 trillion of debt in the latest round of quantitative easing, known as QE3. Within the poll, the median of forecasts from 14 primary dealers - the large financial institutions that do business directly with the Fed - was for the central bank to buy a total of $1.375 trillion under the current stimulus. The poll was conducted on Friday after government data showing U.S. employers added 175,000 jobs last month, which was more than expected, although the unemployment rate in May ticked up to 7.6 percent from 7.5 percent in April. However, several economists said the payrolls numbers would have little immediate impact on their outlook for Fed policy. "Today's report does not alter the course for the (Federal Open Market Committee)," said Lewis Alexander, chief economist at Nomura Securities International in New York. "While improvement in the labor market seemed to continue, some Fed officials have shown their concerns over the cost side of quantitative easing such as excess risk taking. In this context, the bar for an initial decrease in purchases later in the year is unlikely to be particularly high," he said. Of 50 economists polled, 30 said they expect the U.S. unemployment rate to fall to the Fed's target of 6.5 percent in 2015, while 20 forecast unemployment to dip to that level in 2014. (Additional reporting by Sarmista Sen and Rahul Karunakar in Bangalore and Pam Niimi in New York; Editing by Chizu Nomiyama )

Warren Buffett's Berkshire eying Unipol insurance assets: report. The paper said Berkshire was eying commercial assets belonging to Milano Assicurazioni ( ADMI.MI ), a unit controlled by Fondiaria. Unipol has been forced by Italy's anti-trust authority to sell portfolio assets with premiums totaling around 1.7 billion euros ($2.2 billion) as part of its rescue of the Fondiaria-SAI group. The merger, which will create Italy's No. 2 insurer, is expected to close by the end of the year. Unipol CEO Carlo Cimbri said in May there had been 10-15 expressions of interest for the assets, including from Allianz ( ALVG.DE ), Axa ( AXAF.PA ), Aviva ( AV.L ) and Zurich ( ZURN.VX ). Insurance accounted for roughly a quarter of Berkshire's revenues in 2012. Buffett's investments are viewed by many investors as a seal of approval from one of the world's most respected businessmen. Non-binding offers for the Unipol assets are expected next Friday, Il Sole said. Neither Unipol nor Berkshire Hathaway Inc were immediately available for a comment. ($1 = 0.7564 euros) (Reporting By Stephen Jewkes ; Editing by Matthew Tostevin )

UK lawmakers meet to thrash out bank reforms. The Parliamentary Commission on Banking Standards, led by Conservative Andrew Tyrie, was set up by the government last July after Barclays ( BARC.L ) was found to have manipulated global interest rate benchmarks, sparking public outrage. After months of compiling evidence from former and current bank executives, regulators, central bankers, academics, politicians and consumer rights activists, the committee is putting the finishing touches to a 600-page report and will debate it on Monday and Tuesday, industry and political sources said. One of the areas which will be most intensely debated will be the future of RBS, 81 percent-owned by the government. Some members of the commission, including former British Finance Minister Nigel Lawson, want the bank to be broken up, with its toxic assets hived off into a 'bad bank', leaving the resulting 'good bank' better placed to increase lending to British households and businesses. But others are concerned that not enough evidence has been considered on the matter. Outgoing Bank of England Governor Mervyn King brought the issue to the fore by recommending a breakup of RBS in the last of 73 sessions in which he gave evidence to the committee as part of its industry-wide review. Commission sources have said the report will put forward such a move as an option but will not make a definitive recommendation on whether it will be implemented. The commission's final proposals will suggest there is not enough competition within the industry, the sources said, and that Britain's major banks are still not adequately regulated. "One of the key issues is that the major banks are too big and too complex to be able to provide effective corporate governance," one commission member told Reuters. Ways to create new banks and foster competition in the industry will be considered by the committee. Suggestions by some members that customers switch accounts more easily and start-up banks carry less capital are already being implemented. The commission may also recommend a review into the viability of an industry-wide IT platform, which would enable customers to keep their account numbers when they change banks. Excessive pay will also be tackled: the committee will likely recommend tougher sanctions against executives associated with failed banks to stop them working in the industry again. The commission is aiming to publish the report on June 17, according to one source, two days prior to British Finance Minister George Osborne's annual Mansion House policy speech to London's financiers. A spokesman declined to comment. So far the committee has achieved a success with Osborne adopting its proposal to give regulators the power to break banks up if they abuse new rules designed to protect retailers' deposits from riskier investment activities. (Reporting by Matt Scuffham; Editing by Sophie Walker)

China trade data underscores growth worries. Evidence has mounted in recent weeks that the economy is fast losing growth momentum as sluggish domestic demand fails to make up for lethargic export sales. The latest figures, shorn of the hot money speculation and exports to warehouses but booked as sales that had inflated previous months' data, more accurately reflect the grim reality facing China's exporters. "The trade data reflects the sluggish domestic and overseas demand, signaling a slower-than-expected recovery in the second quarter," said Shen Lan, an economist at Standard Chartered in Shanghai. Data for May retail sales and industrial output, as well as investment and inflation, are due on Sunday and could provide more evidence of the slowdown. Exports edged up 1 percent in May from a year earlier, the lowest growth since last July and against a median forecast in a Reuters poll of a rise of 7.3 percent. Data was even worse for imports - they fell 0.3 percent against expectations of a 6 percent rise. The trade surplus was $20.4 billion for the month, compared with market expectations of $19.3 billion. Exports to the United States, China's top export destination, fell 1.6 percent in May, the third straight month of declines, while those to the European Union, the second most important market, fell 9.7 percent, also the third straight month of declines. However, in one bright sign, separate customs data showed that China's imports of major commodities rose in May compared with the previous month, helped by lower prices on world markets and pointing to resilient demand. TESTING TIMES It has been an uncomfortable few months for China's leaders as a raft of data has pointed to a lack of traction for growth. "The domestic economy is facing great downward pressure and the stable development of foreign trade still faces great challenges," Vice-Minister of Commerce Zhong Shan said in a statement on the ministry's website (www.mofcom.gov.cn). China's overseas demand had not recovered obviously while exporters faced more fierce competition in the global market, Zhong said. However, Premier Li Keqiang struck a more upbeat note, being quoted by state television as saying that China's economy was generally stable, growth was within a "relatively high and reasonable range" and the employment situation was stable. "There are increasingly intricate and complicated factors in the economy and we should strictly monitor the changes in the economic situation," said Li. China needs to make use of liquidity already in the economy to support real economic development and curb over-capacity in certain industries, he added. Surveys this month showed that China's factory activity shrank for the first time in seven months in May, with export orders falling, while growth in the services sector cooled. A Reuters poll taken before Sunday's retail and industrial data shows industrial output is seen up 9.3 percent, unchanged from April, while growth in fixed-asset investment, one of the two main drivers of China's economy in 2012, likely rose 20.5 percent in the first five months of this year. That would be equivalent to investment rising 20.2 percent in May from a year ago, Reuters' calculations showed, the slackest pace in at least three months. Growth in retail sales is forecast at 12.9 percent in May, little changed from April's 12.8 percent and below last year's monthly average expansion of 14.2 percent. The IMF and OECD last month cut their forecasts for China's 2013 economic growth to 7.75 percent and 7.8 percent, respectively. China's annual economic growth had slowed to 7.7 percent in the first quarter from 7.9 percent in the previous quarter. The full-year annual growth of 7.8 percent in 2012 was the weakest since 1999. However, China's leaders have adopted a greater tolerance for a slowdown and are likely to allow quarterly growth to slip as far as 7 percent before triggering fresh stimulus to lift activity, sources told Reuters this week. NO SMOKE AND MIRRORS One of the reasons the May export data was so grim is that the government had cracked down on the speculative activities that had created double digit rises in export growth every month this year, even as China's main markets slowed. "The dramatic slowdown in yoy (year-on-year) export growth in May in part reflects the impact of a clamp down by the government on firms dressing up financial inflows as exports," Louis Kuijs, an economist at RBS, said in an emailed note. China's customs also acknowledged the lack of extraneous factors, reflected in the fact that exports to Hong Kong, the main centre for currency arbitrage and warehouse storage, grew only 7.7 percent in May, down from a 57 percent surge in April. "The arbitrage trade to Hong Kong has basically been curbed and the trade between mainland and Hong Kong dropped sharply," it said on its website, www.customs.gov.cn. (Additional reporting by Ben Blanchard ; Editing by Jeremy Laurence and Robert Birsel )

U.S. court dismisses Bloomberg suit against swaps regulator. Bloomberg is one of a dozen or so providers launching a platform on which to trade swaps, as regulators across the world crack down on the $630 trillion market to prevent a repeat of the 2008 financial crisis. But that effort would be hurt by a new rule from the Commodity Futures Trading Commission which will force buyers and sellers of swaps to set aside enough money - or margin - to cope with the impact of a deal falling apart, Bloomberg had argued. That is because the margin on a swap should be enough to cover five days of unwinding the position, but only one day for futures, a similar type of product traded on rival exchanges, making them cheaper to use. The court said, however, that Bloomberg had provided no evidence that this requirement would hurt its business. "Bloomberg ... simply assume the worst-case scenario ... without grounding their assumption in the actual behavior," it said in its ruling. On another point, it said that the "plaintiff's contentions in this regard are remarkably perfunctory and devoid of factual support." Bloomberg will continue to press forward with its legal challenge, a spokesman said. Commissioner Bart Chilton said in a statement that the CFTC could focus on the task ahead of tightening regulations of swaps now that "another attempt to second-guess regulators on financial reform measures sought by Congress and President (Barack) Obama" was behind it. Underlying the lawsuit is a looming battle between exchanges and investment banks over who rules the lucrative derivatives market, a vast playground for speculators, parts of which were long unregulated. Exchanges, which dominate the futures markets, have been regulated for decades and now operate at a lower cost because of the CFTC's rule. The banks hold sway over the swaps market, and fear clients will defect to the exchanges, hurting their revenues as well as the trading platforms - called Swap Execution Facilities (SEF) - Bloomberg and others want to launch. Bloomberg is a competitor of Thomson Reuters Corp. The case is Bloomberg LP v United States Commodity Futures Trading Commission, U.S. District Court for the District of Columbia, No. 13-52 (Reporting by Douwe Miedema; Editing by Vicki Allen and Gunna Dickson)

Mexico says it may suspend U.S. trade preferences over meat labels. The disagreement stems from a 2009 U.S. requirement that retail outlets specify the country of origin on labels on meat and other products in an effort to give consumers more information about the safety and origin of their food. Canada and Mexico have complained to the World Trade Organization that the COOL (country-of-origin labeling) rules discriminated against imported livestock. The trade body ordered the United States to comply with WTO rules by May 23, but the U.S. government made revisions that Canada and Mexico say would only make the situation worse. Mexico and Canada are seeking the WTO's support in their case and the Mexican Economy Ministry said if the U.S. government is found to be in the wrong, Mexico would react. For this reason, the ministry said in a statement it was considering suspending preferential tariffs for a broad variety of produce including fruit and vegetables, juice, meat, dairy products, machinery, furniture, household goods, among others. (Reporting by Dave Graham and Adriana Barrera ; Editing by Eric Walsh )

'Just right' jobs data could help equities. The equity market is on nebulous middle ground. The S&P 500 is just 1.5 percent away from its all-time closing high, but other than Friday's rally on the jobs data, it has been stuck in a period of uncertainty. The Labor Department added 175,000 jobs in May, slightly higher than expected, but at a level that indicates the status quo should hold for the Federal Reserve's stimulus program. Some had worried that if job growth far exceeded expectations, the Fed would reduce bond-buying sooner than expected, while others were concerned that an exceptionally weak number would reveal a fundamentally soft labor market. The data's ability to relieve both fears may benefit stocks. "The number had a little something in it for everybody, in terms of those who suspect tapering might begin sooner and those who think it might start later," said Mark Luschini, chief investment strategist of Janney Montgomery Scott in Philadelphia, adding that the May payrolls figure could "prime market participants to be more positive toward equities leading into next week's trading." The program is widely cited as a major contributor to the S&P 500's .SPX surge of 15.2 percent in 2013, when it has hit a repeated series of record highs. Wall Street's performance has been closely tethered to the Fed's stimulus program, benefiting from the belief that the economy is just weak enough to keep the Fed buying bonds. When Fed Chief Ben Bernanke said on May 22 that the central bank may decide to reduce purchases if the economy shows signs of significant improvement, stocks fell and bond yields surged. The uncertainty has also increased volatility, with the S&P 500 frequently making daily moves of 1 percent or staging dramatic midday reversals. The CBOE Volatility Index .VIX, or VIX, has risen more than 20 percent over the past three weeks, although at a level of 15.14, it is still at a level associated with a relatively calm environment. "Equity markets are in a period of adjustment," said Anastasia Amoroso, global market strategist at J.P. Morgan Funds in New York, which has about $400 billion in assets. "If there's an unannounced change in policy, that could be a shock to the downside." That adjustment is likely to keep trading in a narrow range. On Thursday, the S&P 500 briefly fell under its 50-day moving average of 1,604, as well as below the psychologically important level of 1,600, before rebounding. However, the benchmark index remains below its 14-day moving average of 1,645.08. This year's gains have been broad, with all 10 S&P 500 sectors sharply higher, so it is difficult to determine which sectors may be the most vulnerable to a market pullback. The best-performing sector of the year - health care .SPXHC, up 20 percent - is a defensive group, as is telecom .SPLRCL, one of the year's weaker performers, with a gain of 8.6 percent for the year to date. Cyclical sectors, which are tied to the pace of economic growth and have been especially sensitive to any indication that Fed policy may be changing, have also outperformed the broad market this year. However, despite those gains and the Fed uncertainty, they may not be vulnerable going forward. The shakier sectors have been the big dividend payers, because higher yields on safe government debt would make those shares less attractive. "Investors haven't simply been 'selling the winners,'" Bespoke Investment Group wrote in a note to clients this week. "What investors have been selling are the high dividend payers, which is not usually what happens on pullbacks. In fact, the opposite usually occurs, as investors flock to 'safer' plays." For the week, the Dow Jones industrial average .DJI rose 0.9 percent, the S&P 500 added 0.8 percent and the Nasdaq .IXIC advanced 0.4 percent. Next week, there appear to be few obvious catalysts to change the equation. Only two S&P 500 companies - H&R Block ( HRB.N ) and PVH Corp ( PVH.N ) - are scheduled to report results. The economic data calendar is light, though May retail sales on Thursday and the preliminary reading on June consumer sentiment on Friday will be closely watched. Inflation data will also be on the agenda. The U.S. Producer Price Index, set for release on Friday, is forecast to rise just 0.1 percent in May, according to economists polled by Reuters, after a drop of 0.7 percent in April. On a year-over-year basis, overall PPI is expected to rise 1.4 percent in May, the Reuters Poll showed. "It looks like we're shaping up for a traditional summer where we'll build a base and perhaps enter into the doldrums of summer trading," said Frank Davis, director of trading at LEK Securities in New York. With the exception of consumer stocks, which could be affected by the retail data, Davis added, "I'm not anticipating any meaningful follow-through to next week, but I'm not anticipating any measurable pulldown either." (Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: ryan.vlastelica(at)thomsonreuters.com ) (Editing by Jan Paschal )

BofA CEO subpoenaed, sees no nationalization: WSJ. Investigators took testimony all day Thursday from former Merrill Chief Executive John Thain, the newspaper said, citing the people. Thain was asked about $4 billion in bonuses paid to Merrill employees, and in particular why Bank of America's merger agreement with Merrill contained a nonpublic attachment outlining the maximum Merrill could pay, the newspaper said. Separately, Lewis told Bank of America executives at a senior leadership meeting on Thursday that Washington policy officials have assured him that the possibility of nationalizing the largest U.S. bank by assets is not on the table, the newspaper said, citing a person at the meeting. Cuomo's office, Bank of America and a spokesman for Thain did not return calls seeking comment. Spokesmen for Bank of America and Thain declined to comment to the newspaper. Lewis would be the highest-profile subject of Cuomo's examination of Charlotte, North Carolina-based Bank of America's purchase of New York-based Merrill on January 1. Barely two weeks after the closing, Bank of America revealed that Merrill lost $15.31 billion in the fourth quarter, and got an emergency federal bailout including $20 billion of new capital and a loss-sharing agreement on $118 billion of troubled assets. Bank of America shares closed down 14 percent at $3.93 on Thursday on fears that losses from Merrill, credit cards, recently acquired mortgage lender Countrywide Financial Corp and other areas could lead to government control, wiping out shareholders. Lewis has run Bank of America since 2001. Cuomo's investigators are probing, among other things, whether trading losses were adequately disclosed to shareholders and boards of both companies, and what top executives approving the bonuses knew about the losses, the newspaper said. (Reporting by Jonathan Stempel, Editing by Muralikumar Anantharaman)

Stanford's reappearance brings relief to his folks. "That is one relief off of our minds. We're so pleased and thankful to the Lord that he's alive, and healthy, I'm sure," Stanford, 73, told Reuters. Now begins the hard part. Stanford faces U.S. Securities and Exchange Commission accusations that he engaged in an $8 billion fraud. The SEC has charged Stanford, two of his colleagues and three of his companies. His parents do not believe that Stanford defrauded investors, but they cannot say that it did not happen. "I can't believe that he has, but I won't say 'no,'" said James Stanford, 81, sitting at his desk in a small office in the east-central Texas town of Mexia (Muh-HAY-uh), where Allen Stanford was raised. "I'll defend him. We love him and support him, but he should do the right thing and come forward," the elder Stanford said. "Don't run and hide. God damn, don't do that." Earlier on Thursday, Stanford's father said he knew nothing about the SEC's accusations against his son. He said he did not know where Allen was. Later in the day, FBI agents found Stanford in Fredericksburg, Virginia. Billie Stanford said that he had not yet called his father. James Stanford, chairman emeritus of Stanford Group Co, has received a subpoena and is due to testify for the SEC next week in Waco, Texas. STANFORD EMPIRE STARTED IN 1932 Before Allen turned it into an empire, the company, founded in 1932 by James' father Lodis, sold insurance. Allen took over in 1993. His father has participated in board meetings, but is not involved in day-to-day operations. Another board member who served in a similar capacity is former Mexia car dealer Oliver Goswick. Goswick, known as "O.Y.," lives in Mexia with his family. He has also been subpoenaed. His son, Richard Goswick, said that neither James Stanford nor his father would have known what Allen Stanford was doing as head of the Stanford International Bank (SIB). SIB is based on the West Indies island Antigua. Richard said that James and his father served as board members in an essentially honorary capacity. He said of his father: "If he thought there was anything wrong, he would have divorced himself from the relationship." "These are churchgoing, small-town people," said Richard Goswick, 63, who owns the Dick Scott Ford dealership in Mexia. O.Y. Goswick was a General Motors serviceman and an auto dealer proprietor after leaving the U.S. Air Force, his son said. He said his father had a high school education and was not a sophisticated financier. "His mental capacity at his prime could never conceive of something of this nature," he said, referring to the alleged fraud. In 2000, Goswick suffered a stroke and his health has worsened since then, his son said. He cannot communicate, and can walk only short distances. His son has a doctor's note explaining the elder Goswick's condition, and he plans to send it to the SEC. First, he said, he must hire a lawyer for his father. Goswick said he had met Allen Stanford occasionally over the years, and considered him an intelligent, charismatic man who dressed well and ran a company with an eye on cleanliness as well as success. "You couldn't even be employed by Allen if you smoked," he said, adding that even the hangar where Stanford's planes were stored, was immaculate. NO GLITZ AT MEXIA OFFICE The building is simple, white walled with low ceilings and a gabled roof. Like Mexia, there is nothing flashy. James Stanford wore a black suit jacket, blue shirt and black pants when we met at his one-floor office there. He uses a walker. He wears a brace on his neck and his head leans forward when he speaks, but his sharp eyes really do all the talking. James said his office has no dealings with Stanford's business. Instead, it is a place for him to go besides home. James has been working there for 25 years. A picture of him and his son, smiling in the same office, hangs on a wall. He said he was asked not to talk to the press, but he did not say by whom. He has been giving interviews anyway. James said he knew nothing of his son's business dealings today. But, in the late 1990s, he said, a Mexican customer of Stanford put $3 million into the bank for investment purposes. U.S. Drug Enforcement Administration (DEA) agents then approached Allen Stanford and said the money was from a Mexican drug cartel and had been laundered several times. James said that Allen had told the board about this, and that he had "refunded" the money to the U.S. Treasury. He said: "Allen worked with them, hand in glove." The last time he spoke to his son, he said, was a week ago. James said that during that conversation, Allen intimated that the company was in trouble, but he would only tell his father to read The Wall Street Journal. NO HOMETOWN HERO In a town of fewer than 11,000 people, residents know who Allen Stanford is, but most do not know him well. He left with his mother when he was 9 years old after she and James Stanford divorced. He graduated from high school in Fort Worth. After starting a health club in Waco that failed, Stanford left the United States, Richard Goswick said. He said Allen Stanford then met a lawyer with connections in Antigua, where Stanford now has dual citizenship. Stanford bought many houses and apartments, flipped them for higher prices and worked his way into serious money in Houston. The metropolis lies about 165 miles and a world away from the dusty, sparsely populated streets and many empty brick front stores of Mexia. Bob Wright, editor of the Mexico News, said Allen Stanford "always had an entrepreneurial spirit." That included selling his old bicycle to his neighbor, Jo Bennett, when they were both about 10 years old, Bennett, 58, recalled. "We were just little kids." Though few say they know Allen Stanford well, the Stanford family's history is intertwined with the history of Mexia. James Stanford served several terms as the town's mayor. Even when Allen Stanford's mother sold her house, the real estate agency that Bennett works for handled the sale. Except for visiting his parents and helping his mother to sell her house a month or two ago, Allen Stanford has not been much of a presence in Mexia. "Not that many people knew him," said Dick Flatt of Flatt Stationers Inc. "Stories would come from time to time over the wire about how he done good, made another million in Houston." "We thought maybe he was down in Venezuela somewhere," he said, laughing. (Reporting by Robert MacMillan; Editing by Toni Reinhold )

Stanford whistleblowers had concerns since 2005. Tidwell and Rawl's concerns that Stanford was falsifying the returns of about $8 billion in certificates of deposit were eventually heeded by the SEC, which on Tuesday accused Stanford in a civil complaint of "massive ongoing fraud." But at the time, the SEC inquiry came out of the blue, Tidwell and Rawl told Reuters in an interview at a law office in Houston on Thursday. Clients "just got this FedEx package from the SEC," said Tidwell, 40, who was a Stanford senior vice president before he left the company in 2007, along with Rawl. "We asked what it was about and they assured us that it was just a routine inquiry, it was not any big deal, do not be alarmed," Tidwell said. Fast-forward to the summer of 2006, when Tidwell said he was given instructions to clean up the files on Stanford's international bank clients and remove any non-official documentation and "any sticky notes." A few weeks later, Tidwell learned that the SEC was still investigating Stanford, even though he was given assurances that they were not. To make matters worse clients began calling to inquire about discrepancies between the published performance statistics of Stanford investments and the ones that showed up on clients' statements. "We found out there was bad math," Tidwell said. "Management was aware but not really going to change anything." The discrepancies also grabbed the attention of the SEC. In their complaint filed this week, they point to claims by the Antiguan-based Stanford International Bank that its investment portfolio lost 1.3 percent over a period that the S&P 500 plummeted nearly 40 percent. Rawl said that when he confronted his managers about the performance discrepancies, he was told of ongoing discussions at the "highest level of management" about "whether or not we were going to let this sleeping dog lie." On March 28, 2007, Stanford managers gave a presentation aimed at quelling concerns of employees like Rawl and Tidwell, but "I saw that the numbers were still wrong and that they were trying to mislead us in that meeting," Tidwell said. A manager began the meeting with orders not to put their concerns in writing, which also sounded alarm bells, Rawl said. According to Rawl, the manager said "you can't put these things in writing or in an email because someday the SEC might get a hold of that and say what's going on here?" Over a year later, Stanford's portfolio of assets, estimated by the company at $50 billion, is in the hands of a federally-appointed receiver, and the fate of the thousands of investors who trusted Stanford with their money is unknown. (Editing by Bernard Orr )

Regional central bank seizes Bank of Antigua. The central bank took over the bank in the Caribbean nation of Antigua and Barbuda after "an unusual and substantial withdrawal of funds," the bank said in a written statement. Stanford, who was knighted by Antigua in 2006 and holds citizenship there, was accused this week by the U.S. Securities and Exchange Commission of carrying out a massive fraud through Antigua-based Stanford International Bank (SIB). The SEC said in a complaint filed on Tuesday in Dallas, Texas, that SIB sold $8 billion in certificates of deposit promising impossibly high return rates. SIB, Stanford Group Co, and Stanford Capital Management LLC were named in the complaint along with Allen Stanford, his aide James Davis, and O.Y. Goswick, a Stanford board member. The central bank said publicity surrounding the case had created a situation where the interests of depositors and creditors were threatened and the bank "is likely to become unable to meet its obligations." Earlier on Friday, Antigua and Barbuda's bank regulator appointed a receiver to take control of SIB and Stanford Trust Company. (Reporting by Jim Loney ; Editing by Toni Reinhold )

Stanford used TD Bank, HSBC's services: report. Court filings indicated that TD Bank, HSBC in Europe and National Republic in the United States provided financial services to Stanford's Antiguan affiliate, Stanford International Bank Ltd (SIB), the paper said. HSBC offered no immediate comment on the report. At one point in 2006, Stanford's entities had more than $160-million in various TD accounts, the paper said, citing the filings. The U.S. Securities and Exchange Commission filed civil charges on Tuesday against Stanford, two colleagues and SIB, Stanford Group Co and Stanford Capital Management LLC, accusing them of a "massive, ongoing fraud." "Cash sits at three correspondent banks," the paper quoted a SIB document dated 2005 as saying. The document added that "most money flows through TD," according to the paper. Court filings also showed that the Stanford group had $10.1 million invested through TD Asset Management in 2004, the paper said. "We have been contacted by regulatory authorities and although there are no allegations of wrongdoing on the part of TD, we are, of course, cooperating fully," TD spokeswoman Julia Koene told the paper. Koene confirmed to the paper TD is "one of the banks that provide cash management services to Stanford and we do manage a small investment account on their behalf." She added that the bank does not distribute any of the Stanford Group investment products and that none of its clients have been impacted through their relationship with the bank. TD could not be immediately reached for comment by Reuters. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Rupert Winchester)

No evidence Madoff bought securities, trustee says. In the first meeting of creditors of Bernard L. Madoff Investment Securities, a lawyer for the court-appointed trustee said his staff was "looking at every Madoff family member and every insider associated with the Madoff firm" as part of the effort to find assets. Madoff, a once-respected Wall Street trader and investment adviser, was arrested and charged with securities fraud on December 11 after authorities said he confessed to running a global Ponzi scheme with losses of $50 billion. A Ponzi scheme is one in which early investors are paid off with the money of new clients. All Madoff's assets were frozen and his firm is being liquidated by court order. "The work done to date indicates that for some substantial period, perhaps as much as 13 years ... we have found no evidence that securities were purchased for customer accounts," the trustee, New York lawyer Irving Picard, told the meeting in an auditorium at U.S. Bankruptcy Court. The meeting for Madoff creditors -- including individual investors, banks, charities and others -- was attended by about 100 people and was at times emotional. Picard was confirming statements made by the Financial Industry Regulatory Authority in January that there were no trades made by the Madoff firm. Examinations had also shown no evidence of trading by Madoff's investment fund. That means Madoff either placed trades through other brokerages, a move industry officials have considered unlikely -- or he was not executing trades at all. Picard said at a news conference after the meeting that although no securities were bought or sold, customers still received statements showing trades. "We know how that was done but we can't tell you now," said Picard, citing a criminal investigation by U.S. prosecutors. Picard said his staff was in the process of receiving bids for the market-making part of the firm. The trustee told reporters that the market-making operation and the proprietary trading arm of the firm were legitimate. He said 2,350 customer claims had been filed through Thursday, most of them from individual investors, not the hedge funds that had invested client money with Madoff by the billions and which also consider themselves victims. "To my recollection the total amount is more than $1 billion." The deadline for filing all claims is July 2. The lawyers said creditors would begin to receive letters in one or two weeks about how their claims will be treated. They said creditors were entitled to recover money invested, but none of the phantom profits. Picard said his team is "getting a feel for how this operation worked." Bennett Goldworth, 52, a Manhattan real estate broker who said he lost several million dollars and introduced relatives to investing with Madoff, came away disappointed. "We got some answers but what you heard is there's a lot of frustration and fear because it doesn't seem like anyone is really doing enough to deal with the individual investors," Goldworth said. Retired New York economist Raymond Spungin, 77, said outside the auditorium that he did not expect to get anything back from hundreds of thousands of dollars invested. In the meeting, Spungin told the trustee: "We are victims of the incompetence of the SEC." The U.S. Securities and Exchange Commission investigated Madoff several times over the years but found no wrongdoing. Miriam Siegman, a 65-year-old retiree from New York, told Reuters she had felt alone since discovering that 40 years of savings had evaporated. "I've felt the need to be around other victims. I'm not sure why," said Siegman, who first invested with Madoff in 1992. "It's comforting in a way." Picard is working with the Securities Investor Protection Corp (SIPC) to liquidate Madoff's brokerage and find assets to distribute to customers who believe they were defrauded. (Reporting by Grant McCool and Caroline Humer, editing by Gerald E. McCormick)

At small Antigua accounting firm: Who's Stanford?. Other staff don't even seem to know Stanford. Two people in charge at C.A.S. Hewlett & Co, identified by Stanford as auditors of his offshore bank, told a Reuters reporter on Thursday there was no evidence of any ties to the 58-year-old financier and sports entrepreneur. The man who would know, according to current manager Eugene Perry, is former chief executive Charlesworth "Shelley" Hewlett. He died January 1 at age 73, staff at the firm said. Perry said he never met Stanford in his 10 years at the firm. While speaking with a Reuters reporter in the late Hewlett's personal office, Perry telephoned a woman he identified as the company's current leader. "We are not privy to any information about any relationship with Stanford," said the woman, who would only identify herself as Celia. Asked if she was aware of any files at the firm associated with Stanford, she said she was not. Hewlett's daughter, named Celia, took over responsibility for the accounting firm from London after her father died. It couldn't be determined if the Celia interviewed by telephone was the late Hewlett's daughter. Federal agents on Thursday served Stanford with a complaint from U.S. regulators accusing the Texan of operating an $8 billion fraud centered on the sale of high-yielding certificates of deposit offered by Stanford International Bank Ltd (SIB), his Antiguan affiliate. The interest in Stanford has extended across the Atlantic. Britain's Serious Fraud Office said Thursday it was monitoring a possible link between the accounting firm and Stanford. "It's a situation where there is the possibility there may be a UK link, and so we are monitoring the situation," a spokesman for the SFO said. "It's not the case that we have launched investigators at it. We are making contact and liaising with other authorities," the spokesman added. C.A.S. Hewlett has offices at several London addresses, but the phone numbers were either disconnected or rang unanswered. Two people with neighboring businesses in Enfield, a residential suburb north of London, told Reuters that C.A.S. Hewlett had had a small office in the building on Southbury Road, but that the employees left about four years ago. ANYBODY HOME? The U.S. Securities and Exchange Commission (SEC) said in its court complaint that it had tried several times to contact C.A.S. Hewlett during its investigation, but "no one ever answered the phone." The midyear report of Stanford's Antiguan affiliate, released in June, identified C.A.S. Hewlett as its auditors. The SEC also listed the firm as Stanford's auditor. But the 10 workers in the Hewlett office in a quiet, largely residential neighborhood in the capital, seemed an unlikely operation to manage books for an $8 billion enterprise. During two visits over two days by a Reuters reporter, no one staffed a sparse reception desk in the aquamarine building. On one visit to the reception area that lasted nearly two hours, there was no senior manager in the building. The occasional sound of reggae music wafted from inside the office. C.A.S. Hewlett is listed on the British Commonwealth's website as a "financial services partner" in Antigua with an offshore client portfolio that includes banks, insurance companies and other financial institutions and intermediaries. Charlesworth Hewlett was born in 1936, according to the website, and qualified as an accountant in 1970 after attending South West London College. He also is said to have served in the Britain's Royal Air Force and earned a medal for active service in Cyprus. (Additional reporting by Catherine Bosley and Luke Baker ; editing by Patrick Fitzgibbon, Jeffrey Benkoe, Gary Hill )

Citi not talking to U.S. on nationalization: sources. The U.S. Treasury has not disclosed much more to Citigroup than it has to the broader public about its plans for the banking sector, the people said. Rumors of nationalization hammered U.S. bank shares on Friday, with Citigroup among the hardest hit -- its shares fell 19.5 percent on Friday morning to $2.03, and traded as low as $1.94. (Reporting by Dan Wilchins , editing by Gerald E. McCormick)

ANALYST VIEW: Citi, BofA slide anew on nationalization fear. Citigroup was down 5.2 percent in premarket trade, while Bank of America was 9.4 percent lower. The following is reaction from industry analysts and investors: MATT MCCALL, PRESIDENT OF PENN FINANCIAL GROUP IN RIDGEWOOD, NEW JERSEY "There's that (nationalization) fear at the back of our mind and that's why you're see two stocks, Bank of America and Citigroup getting crushed. They are continuing to move closer to zero because of the fear. Maybe there's only a 2 percent chance of nationalization, but at this point nobody knows, you can't put anything past the government. "There's that fear that we nationalize banks and this market gets killed." MICHAEL HOLLAND, FOUNDER OF HOLLAND & CO, OVERSEES MORE THAN $4 BILLION, NEW YORK "It's a clear sign that the markets are expecting a high probability of them (Citigroup and Bank of America) being nationalized." "The clear expectation is that shareholders would effectively be wiped out." KEITH DAVIS, RESEARCH ANALYST, FARR, MILLER & WASHINGTON IN WASHINGTON, D.C. "There's just so much uncertainty about what's going to happen to these two companies." "No one wants to get involved with these banks." "Right now people are looking at the worst-case scenario which is either a complete nationalization or Bank of America and Citi having to raise so much common equity that they dilute shareholders. It seems to me either one is a possibility." (Reporting by Elinor Comlay , Juan Lagorio and Ellis Mnyandu )

Stanford surrenders passport. The U.S. Securities and Exchange Commission (SEC) filed charges in Dallas, Texas, on Tuesday against Stanford, two of his colleagues and three of his companies, accusing them of an $8 billion fraud. Stanford went unsighted in this historic town on Friday, a day after agents from the FBI's Richmond office, acting at the SEC's request, served him with court papers. Fredericksburg is the family home of a woman said to be Stanford's girlfriend. The FBI served him here on Thursday with an SEC civil complaint and court orders freezing Stanford's assets and appointing a receiver, the SEC said in a statement. "I can confirm that all three defendants in our case have surrendered their passports," Kevin Callahan, an SEC spokesman, said in an e-mailed reply to Reuters. The co-defendants are James Davis, Stanford International Bank's chief financial officer, and Laura Pendergest-Holt, the financial group's chief investment officer. The passports were due to be surrendered to the clerk of the court before a scheduled hearing in Dallas on March 2, according to documents filed at the federal district court in Dallas on Tuesday. Until Thursday, Stanford's whereabouts had been the subject of intense speculation after he failed to respond to an SEC subpoena to answer questions about his company's operations. For much of the day, news crews maintained a vigil outside a family home here of Andrea Stoelker, the woman reputed to be Stanford's girlfriend. But there were no signs that anyone was inside the modest, three-story, brick house on a quiet side street. Late in the afternoon, a young man dressed in jeans and who looked to be in his 30s, emerged from the house and stood at the top of the front steps. When asked about Stanford's whereabouts, he said, "I don't have a clue," and quickly turned to go inside. He declined to give his name. Stoelker is a former local resident identified in published reports as president of the board of directors of a cricket tournament that Stanford sponsored in Antigua, headquarters of his Stanford International Bank (SIB). SIB has affiliates in Mexico, Panama, Colombia, Ecuador, Peru and Venezuela. Adding to the mystery surrounding this case was an ABC News report that Stanford had retained Brendan Sullivan, a lawyer with Williams & Connolly, who ultimately succeeded in his defense of Oliver North in the Iran-Contra scandal of the 1980s. When asked about the report, one of Sullivan's assistants, Rhonda Meadows, told Reuters early on Friday: "Mr. Sullivan has not been retained." (Reporting by Jim Wolf; Additional reporting by Edward Stoddard in Dallas; Editing by Toni Reinhold ) (Reporting by Jim Wolf; Editing by )

Swiss bank shares tumble as UBS tax probe widens. UBS, the world's biggest banker to the rich, led the fall in Swiss bank shares. It was down 12.5 percent at 10:14 a.m. EDT after hitting a fresh all-time low at 10.54 Swiss francs. Shares in rivals Credit Suisse and Julius Baer, both large players in the private banking industry which has thrived thanks to Swiss bank privacy laws, were down 9 and 10 percent respectively. Swiss banks were underperforming a fall in the DJ Stoxx index of European banks, which was down 5.4 percent. Bank worries also hit the Swiss franc, down almost 1 percent against the dollar and 0.6 percent against the euro. Crisis-hit UBS late on Wednesday settled U.S. criminal charges that it had helped rich Americans to dodge taxes. But U.S. tax authorities said on Thursday they were still pursuing a civil lawsuit seeking to access details of 52,000 UBS clients. "It is very unfair to see that the whole profession has been dragged through the mud," Ivan Pictet, senior managing partner and scion of one of Switzerland's largest private banks, said in an interview with the Geneva daily Le Temps. "The reputation of the whole (Swiss) financial center has been tarnished by the fault of a single banking institution," he said. "It is a very annoying precedent for Switzerland." Despite tough Swiss laws protecting bank clients, the government said on Thursday it had no choice but to let UBS hand over data to avoid U.S. criminal charges which could have threatened the bank's existence and hurt the Swiss economy, heavily dependent on the banking industry. "The Swiss made a mistake, they believed that in caving in... that things would come to an end," Douglas Hornung, a Geneva lawyer who represents American clients of UBS who are under U.S. investigation, told Reuters. "They have now discovered with shock that it continues and the whole Swiss financial center is in danger." UBS agreed on Wednesday to pay a fine of $780 million and to disclose about 250 names of U.S. clients it said had committed tax fraud. But U.S. tax authorities now want thousands more names of its citizens it says are hiding about $14.8 billion in assets in secret Swiss bank accounts. PRESSURE MOUNTS Nearly a third of the wealth that is stashed in tax havens around the world is in Swiss banks -- an estimated $2.2 trillion -- making the Alpine state the world's biggest offshore center. Other havens include Liechtenstein, Bermuda and Singapore. Tax-dodging schemes are increasingly under attack by governments scrambling to find revenue needed to finance the soaring costs of government stimulus programs. John Christensen, director of the Tax Justice Network which campaigns against bank secrecy, said he also saw a dramatic shift in public opinion against tax havens. "It is clear to many that the game is over, the game pretending this is a minor issue," he said. "Wealth management has become an euphemism for tax evasion." The issue will be on the agenda at a meeting of European leaders in Berlin at the weekend to prepare for the April G20 summit on reforming global financial rules. The German government said on Friday it had taken note of the UBS settlement and said it will continue to push for the implementation of international standards on tax evasion. Germany, which paid an informant last year to obtain names of German clients hiding funds in LGT bank of Liechtenstein, is now investigating Prince Max of Liechtenstein for possible tax evasion, the Financial Times Deutschland reported on Friday. LGT said in a statement that Prince Max, the bank's CEO who lives in Munich and is the second son of current ruler Hans Adam II, had complied with Germany tax rules and was cooperating with authorities in the investigation. Switzerland's European Union neighbors are also watching the development of the UBS case and are hoping that cooperation with the U.S. authorities will set a precedent. "I would expect that similar requests from EU member states would by no means be treated differently," said a spokeswoman for EU Tax Commissioner Laszlo Kovacs. Kenneth Farrugia, General Manager of Valetta Fund Services in Malta which caters for onshore and offshore clients, said the U.S. investigation had ramifications far beyond UBS. "UBS is not reliant on investors from the U.S., or even on private banking. The stability of UBS is not in question," he said. "The question is how will this affect U.S. customers of other Swiss banks?" UBS shares had rallied on Thursday on hopes the settlement would end uncertainties hanging over the company, which has written down more toxic assets than any other European bank during the credit crisis, prompting clients to loose confidence and withdraw billions of dollars. (Writing by Emma Thomasson and Lisa Jucca, Additional reporting by Martin de Sa'Pinto ; Editing by Hans Peters and David Cowell)

McDonald's CEO says no share loss to Starbucks. When asked if Starbucks, which recently revamped its morning menu with healthier choices, has taken a bite out of McDonald's dominant share of the breakfast business, Skinner said: "No, I don't think so in terms of market share." Starbucks last year rolled out a variety of healthy new breakfast items such as oatmeal and removed offensive-smelling ingredients from its hot breakfast sandwiches, rather than cutting them from the menu as was originally planned. "They've been all over on this idea of breakfast. First they were in, then they were out," Skinner said at a luncheon at Northwestern University's Kellogg School of Management. "It's probably a good idea for them to get back into breakfast," he said. "I wish them well, but not too well." Starbucks, which built its business selling $3 and $4 espresso drinks, has been discounting since its U.S. business began softening in late 2007. Early next month it will begin selling lower-priced breakfast pairings such as a tall latte with oatmeal or reduced-fat cinnamon swirl coffee cake for $3.95. Starbucks executives said in September that hot oatmeal is the coffee chain's single most popular food item and its most successful food product launch. (Reporting by Ben Klayman , writing by Lisa Baertlein; Editing by Bernard Orr )

GM's Europe brands survival dependent on state aid. Filing for protection from creditors on Friday, Saab said it would present a reorganization proposal within three weeks while court filings revealed it estimates its losses in 2008 and 2009 at around 3 billion Swedish crowns ($340.1 million). Stockholm's Industry Minister said the information received about Saab's situation on Friday was not enough for the Swedish government to provide the carmaker with loan guarantees. "I have told GM we have doubts about this business plan," Maud Olofsson told a news conference. Separately, the White House and U.S. Treasury Department on Friday convened the first meeting of a task force set to determine by March 31 whether GM and Chrysler LLC, can be competitive. While Fiat agreed with lenders on a new line of credit, Moody's said weak cash flow and lower contributions from Volvo ( VOLVb.ST ) and Nissan ( 7201.T ) and led it to downgrade Renault's ( RENA.PA ) debt two notches to Ba1, the highest rated junk category. Opel became the first European carmaker to seek a government bailout since the crisis began. It requires a total of 3.3 billion euros ($4.15 billion) in liquidity to keep it afloat through the end of 2011 when it launches four new models including the Chevy Volt-sister Ampera, a company source said. Opel will ask for total state guarantees for loans that would amount to around 2.6 billion euros, with contributions in labor cost cuts from its workforce to provide the remaining 700 million euros. Apart from a continued plunge in European car markets and a painful weakening in key currencies, the presentation of GM's comprehensive viability plan introduced a totally new and unpredictable variable into Opel's financing equation. For example, the new Insignia manufactured in Russelsheim with right-hand drive and a Vauxhall badge is priced for the UK market according to a stronger sterling-euro exchange course. "We end up losing a couple of thousand euros per car," the source said. "And we also have a huge problem with the rubel. You cannot increase prices (on Opels exported to Russia from western Europe) as fast as the currency depreciates." In a statement sent to Reuters, Opel finance chief Marco Mollinari confirmed new developments mean it now requires more than the initial 1.8 billion euros in guarantees. A source at the German government said Opel had explained the situation could become dramatic by March with its cash tight and a threat looming of balance-sheet insolvency. News of the higher funding needs could weaken political supporters who have argued in favor of extending guarantees, conjuring up images of Hypo Real Estate HRXG.DE. The German covered bond specialist received more than 100 billion euros in aid after multiple funding shortfalls were discovered at its Irish state financing unit Depfa, sparking a controversial debate over its possible nationalization. HOSTILE TAKEOVER A person familiar with the matter said that Berlin was informed in advance of growing problems at Opel. "It's entirely clear that (Opel) cannot become a bottomless hole. When you talk about a plan then there must be one sum that can sustain a business model until time 'X' without any ifs ands or buts," that person said. Stockholm's Industry Minister called GM's business plan for Saab "still too optimistic" and warned the parent the government would not hand out guarantees to companies not sound or solid. Olofsson, who has repeatedly ruled out owning carmakers, demanded that GM answer how it plans to make Saab profitable and provide the resources necessary to launch new car models. In a first step of goodwill, GM's global purchasing boss Bo Andersson said the parent would establish a "mechanism" that ensures suppliers to Saab are paid in a timely fashion. Proposing to concentrate design, engineering and manufacturing in Sweden, Saab said Friday the court-appointed administrator's reorganization would take three months and require independent funding as it seeks a new investor. "Even though we have not been actively searching for new partners, we have had many knocking on our door showing interest in Saab," its chief executive, Jan-Ake Jonsson, told a news conference in the carmaker's hometown of Trollhattan. The crisis has come at a tough time for Saab just as it is scheduled to launch badly needed new models like the upcoming 9-5, which were set to rejuvenate its elderly product range. Opel itself plans to roll out the fourth generation of its bestseller, the Astra hatchback, and all knew versions of the Meriva and Zafira minivans in the coming years. (Additional reporting by Veronica Ek in Trollhattan as well as Jan Schwartz, Rene Wagner, Niklas Pollard and Marcus Wacket; Editing by Rupert Winchester, Patrick Fitzgibbons and Matthew Lewis )

FACTBOX: Key facts about GM subsidiary Saab. * Headquarters: Trollhattan, southwest Sweden. * Financials: 2007 operating loss of 2.19 billion Swedish crowns ($248 million loss), after a 2.90 billion loss in 2006, according to the Swedish Companies Registration Office. Saab Automobile has not made a profit since 2001. (GM does not report Saab financials separately.) * Employees: 4,108 at the end of 2008, of which 3,717 in Trollhattan. 2,059 blue-collar workers are employed at the Trollhattan factory. * Sales: 93,295 vehicles globally in 2008, or 1.1 percent of total GM sales volume, down 25 percent from 2007. * History: Saab has made cars in Trollhattan since 1949. GM bought 50 percent of the firm in 1989 when Saab Automobile was established as an independent company, following a joint venture agreement with Saab-Scania. GM bought the rest of Saab Automobile in January 2000. * Products: Saab's car models 9-5 and 9-3 are built in Trollhattan. Saab 9-3 Cabriolet is made in Magna Steyr in Graz, Austria. GM's current plan is to move production of Saab 9-5 to its Opel factory in Russelheim, Germany, in 2009. (Sources: Saab Automobile, GM Sweden, GM Europe, Swedish Companies Registration Office) (Reporting by Victoria Klesty, editing by Dan Lalor)

Bystanders pulled into Stanford financial mess. On Friday, Rosenthal became the first person to file a lawsuit asking a federal judge to dissolve an order freezing assets that put him and thousands of others into financial limbo this week, court documents show. Rosenthal, a Houston-based lawyer, is representing himself in the matter. The suit was filed in the Northern District of Texas Forth Worth Division four days after U.S. officials charged Stanford with having run a "massive, ongoing fraud" and a federal judge in Texas froze the company's assets. "The market is fluctuating and I would like to be able to be in control of my financial destiny," Rosenthal said in an interview, adding "This is customer property not Stanford Group Company property." Rosenthal's suit illustrates the wide reach Stanford's purported fraud is having and how it is affecting even investors who never relied on the Texas-company's investment advisers for advice. Rosenthal said his frozen brokerage account is valued between $50,000 and $100,000 and said it holds two securities that are publicly traded on the New York Stock Exchange. He was exasperated that Sir Allen Stanford, the company's head, is free to move around after having been charged with fraud while his own money is locked up. "I'm upset because I'm entangled in a fraud even though I had not bought any CDs issued by Stanford or other securities that the Securities and Exchange Commission are probing now," Rosenthal said. And he is not alone. A sense of urgency is spreading among other clients whose brokerage accounts are also frozen. One retiree, who asked not to be identified, said he needs the money that is currently frozen to pay for rent and groceries. "The next big issue will be getting the non-CD, legitimate securities released and we are very nervous about that," said Randy Pulman, a partner at law firm Pulman, Cappuccio and Pullen, who also has clients whose brokerages are frozen. Securities and cash owned by Rosenthal and other Stanford brokerage customers are held in custody at Pershing LLC, a unit of the Bank of New York Mellon Corp which is one of the world's biggest custodial banks. "Until further notice Stanford's clients' brokerage accounts held at Pershing have been frozen on request of the receiver and no funds or securities may leave the brokerage accounts without the receiver's approval," Pershing spokesman Michael Geller said. But some Stanford brokerage account holders, who have called Pershing's New Jersey offices for assistance, say they are frustrated that they were told to contact the receiver where they say no one was available to speak to them in person. The receiver in the Stanford case told investors on Friday they could contact their brokers to sell stock in their account, but they could not transfer assets to another firm. Cash and securities in customer accounts with third party, independent clearing brokers remain frozen for the foreseeable future, the receiver said in a news release. "All of us have been unfairly singled out in this mess," said Rosenthal, who moved his brokerage account to Stanford several years ago. "I came over when my broker moved from Wachovia to Stanford and they really courted me," Rosenthal said, remembering "They supported a lot of charities and that was certainly important to me." Stanford has donated money to a cancer hospital, art museum as well as libraries and schools, according to their corporate reports. Now Rosenthal hopes a judge will act quickly on his motion. "The order freezing assets has far reaching consequences and I hope to get an answer soon." (with additional reporting by Anna Driver and Chris Baltimore in Houston; Editing by Bernard Orr )

Bank of America CEO subpoenaed by Cuomo: source. State investigators are probing whether trading losses were adequately disclosed to shareholders, who were asked to approve the deal in December, and to the boards of both companies. Cuomo also is asking what top executives who approved the bonuses knew about the losses, the source said. In a related development, Cuomo's office took testimony from former Merrill CEO John Thain in an all-day session on Thursday, the source said. Thain was asked about $4 billion in bonuses paid to Merrill employees and why Bank of America's merger agreement with Merrill contained a secret attachment outlining the maximum Merrill could pay, the source said. News that Merrill paid bonuses, despite nearly collapsing this year and posting $15.3 billion in fourth-quarter losses, sparked outrage among investors and government officials. Merrill awarded bonuses in December, a month earlier than it did in past years and just before the deal with Bank of America closed. Cuomo's office declined to comment. Bank of America and a Thain spokesman did not immediately return calls. Charlotte, North Carolina-based Bank of America acquired the nation's largest brokerage on January 1. Two weeks later, Bank of America revealed that Merrill lost $15.3 billion in the fourth quarter and announced a second U.S. government capital infusion of $20 billion. Bank of America shares dropped 14 percent to $3.93 on Thursday amid fears that losses from Merrill, credit card-related problems, recently acquired mortgage lender Countrywide Financial and other areas could lead to a takeover by the U.S. government. (Reporting by Joseph A. Giannone ; editing by Jeffrey Benkoe)

J.C. Penney profit tops view; sees Q1 loss. The most recent quarter's results were better than analysts expected, helped by efforts to cut inventory and expenses amid the weakest holiday shopping season in nearly four decades. Penney said it intends to gain market share despite the bleak outlook for 2009 by touting unique brands and winning over customers who used to shop at competitors that have since gone bankrupt, like Mervyn's and Linens 'n Things. "This is truly a time of the survival of the fittest in retailing," said Chief Executive Officer Myron "Mike" Ullman, on a call with analysts. Net profit fell to $211 million, or 95 cents per share, from $430 million, or $1.93 per share, a year ago. Earnings were 94 cents per share from continuing operations, topping analysts' average estimate of 92 cents per share, according to Reuters Estimates. The company forecast a loss of 20 cents to 30 cents per share in the first quarter on sales expected to fall 10 percent to 13 percent. Analysts were expecting a loss of 18 cents per share on revenue of $3.76 billion in the first quarter. Penney also canceled its annual analyst meeting in Plano, Texas, in April, citing the recession's impact on many firms' travel budgets. Members of senior management will meet with analysts and investors in New York on April 22 instead. SALES OFF AS CUSTOMERS PULL BACK Department store operators, including Penney, Kohl's Corp ( KSS.N ), Macy's Inc ( M.N ) and Saks Inc SKS.N, have been hit hard by the recession as customers make fewer trips to the mall and avoid splurging on clothes, jewelry and home decor. "Mall traffic still continues to be down 6, 7, 8 percent a week," Ullman said. "But also when you get in the store, conversion is still under pressure. So the customer is very tentative. They're buying what they need, and they're being smart about how they spend their money." Penney's net sales fell nearly 10 percent to $5.76 billion, hurt by deep discounts and consumers shunning discretionary purchases. Same-store sales fell 10.8 percent. Ullman said sales were strong in shoes, women's clothing and at its Sephora cosmetic centers, but weaker in its jewelry and home businesses. Penney has been stocking its stores with a wide array of private or exclusive brands, like nicole by Nicole Miller and Fabulosity by Kimora Lee Simmons. Ullman said he believes the retailer is taking market share in women's clothing. The company's shares were up 4 cents at $14.96 in late morning trading on the New York Stock Exchange. (Additional reporting by Martinne Geller , editing by Dave Zimmerman)

INSTANT VIEW: U.S. Jan CPI rose 0.3 percent. KEY POINTS: * The Labor Department said its closely watched Consumer Price Index rose 0.3 percent after falling 0.8 percent in December. * Analysts polled by Reuters had forecast headline CPI rising 0.3 percent. * Core prices, which exclude food and energy items, rose 0.2 percent after being flat in December. * That compared to analysts' prediction for a 0.1 percent increase. * On a year-over-year basis, consumer prices were flat, the weakest reading since August 1955. The index rose 0.1 percent year-on-year in December. COMMENTS: TERRY MORRIS, SENIOR VICE PRESIDENT, SENIOR EQUITY MANAGER, NATIONAL PENN INVESTORS TRUST COMPANY, READING, PENNSYLVANIA: "I guess I would call it a non-event, at least as far as this morning's opening is concerned. It looks like the market is opening on foreign market weakness, which is based on our weakness yesterday. "It did move up, and energy has moved higher while basic materials like gold have firmed up. I don't see it as a bad sign, certainly its counter to deflation, which has been talked about as a risk. I guess if anything, it's good news that it ticked up, not that we love inflation. I think its better that it ticked up and that we're pointing away from deflation." AROOP CHATTERJEE, SENIOR CURRENCY STRATEGIST, BARCLAYS CAPITAL, NEW YORK: "The focus is not so much on deflation at this point. The report wasn't really significant because it didn't really surprise the market. It would have moved the market more had we seen a decline in CPI. But even though the report did not show deflation, it doesn't ease risk aversion in general. The dollar will continue to see safe-haven flows especially with the concerns about the euro zone and eastern Europe ." SCOTT BROWN, CHIEF ECONOMIST, RAYMOND JAMES & ASSOCIATES, ST PETERSBURG, FLORIDA: "Treasuries pared their gains on the increase in the core (CPI), but I think you have to take the January numbers with a grain of salt because a lot of firms will try to pass along annual price increases early in the year. "The main story for Treasuries is a flight to quality and safety, with equities poised to open lower. There are still questions about whether some kind of bank nationalization is coming." JOSEPH TREVISANI, CHIEF MARKET ANALYST, FX SOLUTIONS, SADDLE RIVER, NEW JERSEY: "The numbers are much as expected. You are not going to have much affect on the dollar, on the euro or on equities. This has allayed temporarily fear of heightening deflation." MARKET REACTION: STOCKS: U.S. equity index futures pare losses after CPI/ BONDS: U.S. Treasury debt prices pare gains. DOLLAR: U.S. dollar erases losses vs yen.

FACTBOX: Gold milestones on road to $1,000 an ounce. Spot gold meanwhile rose to a peak of $998.50 an ounce before running into fierce resistance below $1,000. Both are benefiting from a strong flight to safety as fears mount over the stability of the financial system and the prospect of rising inflation. Following are key dates in gold's trading history since the early 1970s: * August 1971 - President Richard Nixon takes the dollar off the gold standard, which had been in place with minor modifications since the Bretton Woods Agreement of 1944 fixed the conversion rate for one Troy ounce of gold at $35. * August 1972 - The United States devalues the dollar to $38 per ounce of gold. * March 1973 - Most major countries adopt floating exchange rate system. * May 1973 - U.S. devalues dollar to $42.22 per ounce. * January 1980 - Gold hits record high at $850 per ounce. High inflation because of strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution, prompts investors to move into the metal. * August 1999 - Gold falls to a low at $251.70 on worries about central banks reducing reserves of gold bullion and mining companies selling gold in forward markets to protect against falling prices. * October 1999 - Gold reaches a two-year high at $338 after agreement to limit gold sales by 15 European central banks. Market sentiment toward gold begins to turn more positive. * February 2003 - Gold reaches a 4-1/2 year high on safe-haven buying in run-up to conflict with Iraq. * December 2003-January 2004 - Gold breaks above $400, reaching levels last traded in 1988. Investors increasingly buy gold as risk insurance for portfolios. * November 2005 - Spot gold breaches $500 for the first time since December 1987, when spot hit $502.97. * April 11, 2006 - Gold prices surpass $600, the highest point since December 1980, with funds and investors pouring money into commodities on a weak dollar, firm oil prices and geopolitical worries. * May 12, 2006 - Gold prices peak at $730 an ounce with funds and investors pouring money into commodities on a weak dollar, firm oil prices and political tensions over Iran's nuclear ambitions. * June 14, 2006 - Gold falls 26 percent to $543 from its 26-year peak after investors and speculators sell out of commodity positions. * November 7, 2007 - Spot gold hits a 28-year high of $845.40 an ounce. * January 2, 2008 - Spot gold breaks above $850. * March 13, 2008 - Benchmark gold contract trades over $1,000 for the first time in U.S. futures market. * March 17, 2008 - Spot gold hits an all-time high of $1,030.80 an ounce. U.S. gold futures touch record peak of $1,033.90. * Sept 17, 2008 - Spot gold rises by nearly $90 an ounce, a record one-day gain, as investors seek safety amid turmoil on the equity markets. * Feb 20, 2009 - U.S. gold futures rise back above $1,000 an ounce to a peak of $1,000.30 as investors turn back to gold as major economies face recession and equity markets tumble. -- Sources: GFMS Ltd, World Gold Council, Commodity Research Bureau and Reuters database (Compiled by Jan Harvey; Editing by James Jukwey )

United Tech cuts compensation for two top execs. The world's largest maker of elevators and air conditioners awarded new chief executive Louis Chenevert compensation worth $18 million, 13.5 percent less than the $20.8 million he was paid the previous year as chief operating officer, according to a document filed with the U.S. Securities and Exchange Commission on Friday. Chairman George David, who handed over the CEO position to Chenevert on April 8, received pay worth $26.3 million, 31 percent less than the $38.1 million he received in 2007. That came in a year the Hartford, Connecticut-based company's earnings rose 11 percent to $4.69 billion. United Tech shares last year fell about 30 percent, a less-steep drop than the 34 percent tumble of the blue-chip Dow Jones industrial average .DJI and the 38 percent slide of the broad Standard & Poor's 500 index .SPX . Fellow U.S. conglomerate General Electric Co ( GE.N ) said earlier this week that Chief Executive Jeff Immelt had asked to be paid no bonus, receiving compensation worth about 28 percent less for 2008, when earnings fell 22 percent. Executive bonuses have come under fire this year, particularly at large banks that have received bailout money from the federal government. Across the economy, companies have been taking steps to cut their payroll expenses, with heavy-equipment maker Caterpillar Inc ( CAT.N ) laying off tens of thousands of workers and package-delivery company FedEx Corp ( FDX.N ) cutting the pay of salaried workers. The decline in Chenevert's and David's compensation reflects a reduction in the value of stock and option awards through the course of the year. United Tech's Chenevert received a $3 million bonus, higher than the $2 million he received in 2007, but less than the $4 million that predecessor David got that year. The company reduced David's 2008 bonus to $2 million, saying that and a lower base salary reflected David's lighter responsibilities. Both Chenevert and David's bonuses were higher than the company initially planned. "The ability to continue double-digit earnings growth in the 2008 environment, in combination with a smooth CEO transition and successful retention of key senior leaders, warranted an upward adjustment," the company's compensation committee said in the SEC filing. (Editing by Andre Grenon )

Swedish government: Door not closed to Saab loan guarantees. "It is not the case that we have closed the door to that. That will depend on what the plans look like," said Joran Hagglund, state secretary at the Swedish Industry Ministry. Hagglund said he could not say what specific conditions the government would demand to provide loan guarantees. "The general demand is that there must exist sufficient collateral," he said. "If you provide loan guarantees to someone, you must be sure the company has a future." Saab Automobile said earlier on Friday it would file for a reorganization plan, a Swedish legal procedure which would give it protection from creditors. The company said it would seek funding from both public and private sources.

Treasury says banks should stay privately owned. "There are a lot of rumors in the market, as always, but you should not regard these as any indication of the policy of this administration. As Secretary (Timothy) Geithner has said, we will preserve a financial system that is owned and managed by the private sector," Treasury spokesman Isaac Baker said in a prepared statement. The statement followed comments from White House Press Secretary Robert Gibbs, who told reporters earlier in the day that President Barack Obama continues to believe "a privately held banking system is the correct way to go." (Reporting by Corbett B. Daly and David Lawder. Editing by Dan Grebler)

Stanford's whereabouts: again a mystery. The home of relatives of a woman said to be a girlfriend of Stanford became a magnet for reporters and photographers, but there were no signs that anyone was inside. Intense speculation had surrounded Stanford's whereabouts since Tuesday, when the U.S. Securities and Exchange Commission filed civil charges against him, two of his colleagues and three of his companies, accusing them of an $8 billion fraud. Stanford, who failed to respond to a subpoena earlier this week, surfaced here on Thursday and was served with court papers related to the SEC charges. An American flag fluttered in the cold breeze above the doorway of this modest, three-story brick house that belongs to relatives of Andrea Stoelker, according to a cross-referencing data bank and the Free Lance-Star, a Fredericksburg newspaper. Stoelker is a former local resident identified in published reports as president of the board of directors of a cricket tournament that Stanford sponsored in Antigua, headquarters of his Stanford International Bank (SIB). The FBI said its agents were acting at the request of the SEC when they served Stanford with papers in Fredericksburg, about 50 miles south of Washington, D.C. "We were helping out there to locate and serve papers," said Bill Carter, an FBI spokesman in Washington. Stanford, 58, was not taken into custody, Carter said. He declined to discuss how Stanford had been located. Other officials said he was not a fugitive and had not been hiding. No one at the Stoelkers' house returned a message left on an answering machine that greeted callers: "You've reached the Stoelkers. We're not available to take your call right now. Please leave a message, and we'll call you back as soon as possible." SEC spokesman Kevin Callahan said that Stanford and his two co-defendants had surrendered their passports in keeping with a judge's order. The co-defendants are James Davis, SIB's chief financial officer, and Laura Pendergest-Holt, chief investment officer of a Stanford affiliate. Callahan declined to comment on when and where the passports had been given up. Also uncertain was an ABC News report that Stanford had retained attorney Brendan Sullivan of Williams & Connolly. When asked about the ABC report, one of Sullivan's assistants, Rhonda Meadows, told Reuters early Friday: "Mr. Sullivan has not been retained." A Free Lance-Star reader e-mailed the paper Thursday night, saying Stanford had picked up a tab for the reader's family dinner at a local restaurant, Claiborne's, on November 7 after the family agreed to give up its earlier reservation time. The reader wrote that he had introduced himself as Allen Stanford, said he lived in the Virgin Islands and that his girlfriend's parents lived in the area. According to a local tour operator, Fredericksburg has a reputation as "one of the most haunted locales in the United States." "With a long history dating back to preColonial times, and a legacy of slavery and war, it is no wonder that so many unhappy phantoms wander the streets," the tour operator says in promotional material. The Battle of Fredericksburg was fought in the area in December 1862. (Reporting by Jim Wolf; Editing by Lisa Von Ahn)

Antigua seizes control of Stanford units. An official statement said agents from the receiver were "currently on site in Antigua to take control of the entities," which it named as Stanford International Bank Ltd and Stanford Trust Company Ltd. (Editing by Lisa Von Ahn)

UBS chief faces his biggest career challenge. Only one day after agreeing to a painful, though vital, tax fraud settlement with U.S. authorities, Rohner was hit by a dramatic civil lawsuit against Switzerland's biggest bank that is sending shivers through the entire Swiss banking industry. The ongoing U.S. tax woes, together with an uphill struggle to restructure the crisis-hit bank, make what used to be the pinnacle of any Swiss banker's professional ambition an unenviable poisoned chalice. "This is the last thing he would want," said David Williams, Head of European Banks Research at Fox, Pitt-Kelton. "A difficult task has become even more difficult." Under former, all-powerful chairman Marcel Ospel, UBS, the world's largest wealth manager, waded deep into U.S. subprime assets and was hit in 2008 by a net loss of nearly 20 billion Swiss francs ($16.92 billion), the largest annual loss in Swiss corporate history. Rohner, 44, was named CEO just before the subprime meltdown in June 2007 and was thrown into steering UBS through its monumental crisis. Together with Chairman Peter Kurer, who replaced Ospel in April 2008, he tried to break from the past by announcing a radical restructuring plan in August. Last week, Rohner said net new money had turned positive in both wealth and asset management in January, boosting its shares, briefly. However, there is growing concern in Switzerland that changes are not being implemented fast enough and that a new management team may be needed to start attracting clients again. "Rohner and Kurer are both men of the past. They belong to the management team of Ospel," said Lukas Haessig, a Swiss journalist and the author of investigative book "Der UBS-Crash" (The UBS-Crash). "For a year now they have been trying to turn around the bank and did not succeed in bringing back confidence. Time is running out," said Haessig, whose book came out earlier in February. GENERATIONAL CHANGE Rohner, who has an economics doctorate and had previously led UBS' core wealth management division, became CEO when his long-standing predecessor abruptly resigned. His rise to the top was stellar and a few feathers were ruffled, observers say. Open and laid-back, Rohner, who has spent nearly his entire career at UBS, makes a stark contrast with the sober approach of Kurer, the bank's former general counsel. Rohner, who was deputy CEO and head of UBS's prized wealth management arm, found himself having to scramble for investors' cash in the face of growing writedowns while trying to fend off a damaging U.S. probe into allegations the bank helped Americans hide money to avoid taxes. On the brink of collapse, UBS had to turn to the state for help in October and got a 6 billion franc loan. Pressure on Rohner and Kurer has mounted further since Swiss media started to attack UBS's generous bonus structure at the end of last year in the face of ever-growing losses, prompting top managers to give up or pay back bonuses. "I believe UBS needs new people and a new structure. The bank is far too big for Switzerland, and that poses a threat," said Willy Ruegg, a leader at trade union KV Zuerich, who has been vocal about the need to reform the bank. UBS and Credit Suisse's combined liabilities are around seven times the country's GDP, potentially posing a systemic risk to the country should one of them fail. Speculation about who could take the helm of UBS has been rife since well before Ospel's rushed departure last year. While last time the bank chose to appoint its top team internally, observers say this time around an outsider could take over, signaling a clear break with the past. Fiat CEO and UBS Deputy Chairman Sergio Marchionne, who in the past expressed veiled doubts about Kurer, raised questions about whether Rohner can deliver a turnaround at a January investor meeting, newspaper Cash reported last week, quoting people who attended the event. The name of Deutsche Bank CEO Josef Ackermann, who is Swiss, has been doing the rounds as a possible chairman or CEO, but his own track record with Deutsche Bank is not spotless. The German bank was also hit by the subprime turmoil and lost 3.9 billion euros in 2008. While pressure on the top management remains strong, a change at the top in the middle of the storm might further weaken the battered bank. "A change at the top management and board level right now would be very de-stabilizing for UBS," said Rainer Skierka, a bank analyst with Sarasin. "Also, the question is: who would be the alternative leaders? (Editing by Simon Jessop)

Wall Street skids on bank fears. Uncertainty about how Washington will rescue beleaguered banks persisted even as the White House issued its most direct statement yet on banks, saying it supported a privately held banking system. The S&P 500 had plunged close to a 12-year low before the White House statement. "We have had a loss in confidence because the government keeps changing its playbook, and when that happens investors don't want to put any capital into the market," said James Paulsen, chief investment strategist at Wells Capital Management in Minneapolis. Citigroup and Bank of America, which were buffeted by rumors that they were candidates for nationalization, finished down 22.3 percent and 3.6 percent, respectively. They had been down more than 35 percent before the White House comments. The Dow Jones industrial average fell 100.28 points, or 1.34 percent, to close at 7,365.67. The Standard & Poor's 500 Index ended down 8.89 points, or 1.14 percent, at 770.05. The Nasdaq Composite Index dipped 1.59 points, or 0.11 percent, to 1,441.23. For the week, the Dow fell 6.2 percent; the S&P 500 slid 6.9 percent; and the Nasdaq tumbled 6.1 percent. Investors view the stabilization of the banking sector as crucial for the economy to avert further deterioration, with both businesses and consumer lending still constrained. Bank of America closed at $3.79, and was the most heavily traded stock on the New York Stock Exchange. Citigroup ended at $1.95, the first time since January 1991 it closed below $2. White House spokesman Robert Gibbs told a news conference: "This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring they are regulated sufficiently by this government. The White House statement followed comments by Senate Banking Committee Chairman Christopher Dodd, who told Bloomberg news in an interview that a nationalization of some banks could be needed "at least for a short time. CNBC television reported the U.S. Treasury department will provide some details on the Obama administration's bank rescue plan next week, helping financial shares cut losses. Besides financials, top drags also included energy companies, with Chevron down 2.4 percent at $65.07 amid a pullback in oil prices, and big manufacturers, with Boeing Co off 3.4 percent at $36.31. Shares of BlackBerry maker Research In Motion ended down 7 percent at $39.15, making it the top Nasdaq drag. Design software maker Adobe Systems , fell 7.7 percent at $18.04. After the Dow broke through November's bear market lows on Thursday, investors worried that the S&P 500 might not be far from violating its three-month lows. There was also concern the market could retest levels not seen since 1997. The expiration of February options may have exaggerated the intraday swings in the market on Friday as traders unwound their February positions and rolled them into March and longer-dated months. Trading was active on the New York Stock Exchange, with about 2.12 billion shares changing hands, above last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.57 billion shares traded, above last year's daily average of 2.28 billion. Declining stocks outnumbered advancing ones on the NYSE by a ratio of more than 8 to 3, while on Nasdaq about five stocks dropped for every two that rose. (Additional reporting by Jennifer Ablan ; Editing by Leslie Adler)

FACTBOX: Profitability of European auto brands. Below are some details about the profitability of European automobile brands. OPEL/VAUXHALL (GENERAL MOTORS) The group posted an operating margin of -11.8 percent for the nine months through September 30. It does not break down its results by individual brand, which in Europe include Germany's Opel and the UK's Vauxhall Motors. Its GM Europe operations posted an operating margin of -3.4 percent, compared with -15.7 percent for GM North America. SAAB Sweden's Saab Automobile, a wholly-owned subsidiary of GM, has not made a profit since 2001. GM does not report Saab financials separately but the Swedish Companies Registration Office data showed it made an operating loss of 2.19 billion Swedish crowns ($251.7 million) in 2007, and a 2.90 billion Swedish crown loss in 2006. PORSCHE Porsche posted a 115 percent operating margin for the 12 months to July 30 2008, benefiting from a one-time gain. DAIMLER Germany's Daimler posted an earnings before interest and tax (EBIT) margin of 2.8 percent for the full year 2008. Its vans and buses divisions posted the best margins, at 8.6 percent and 8.4 percent respectively. Trucks saw an EBIT margin of 5.6 percent while its Mercedes-Benz car brand posted an EBIT margin of 4.4 percent. VOLKSWAGEN Volkswagen recorded a group operating margin for the nine months to September 30 of 5.8 percent. Volkswagen brand passenger cars' margin reached 3.4 percent. The group's Spain-based SEAT brand had an operating margin of -0.7 percent while the Czech Republic's Skoda posted 7.2 percent. The Audi brand recorded an 8.0 percent operating margin, while luxury brand Bentley's margin was 8.8 percent. BMW The German group's operating margin was 4.1 percent for the nine-months to the end of September. FIAT Fiat Group, including CNH tractors and Iveco trucks, posted a trading profit -- operating profit excluding extraordinary costs like restructuring of 3.4 billion euros ($4.28 billion) on net revenues of 59.4 billion euros. The automobile division, which includes the Fiat, Lancia and loss-making Alfa Romeo brands, saw a trading profit of 691 million euros on net revenues of 26.9 billion euros. The luxury Ferrari brand's trading profit reached 339 million euros on 1.9 billion euro sales, while Maserati's trading profit was 72 million euros on sales of 825 million euros. PSA PEUGEOT CITROEN French group PSA Peugeot Citroen recorded a 3.6 percent margin for 2008. Its automotive division achieved a margin of 2.6 percent. The group does not publish separate margins for its Peugeot and Citroen brands. RENAULT France's Renault's automobile division recorded a -0.8 percent operating margin from its automobile division, compared with 0.6 percent for the group as a whole in 2008, including its financing division. ($1=8.701 Swedish Crown) ($1=.7938 Euro) (Reporting by Maria Sheahan , Gilles Castonguay and Victoria Klesty; Writing by Helen Massy-Beresford; Editing by Sharon Lindores)

Lowe's posts profit drop, cuts store openings. The second-largest home improvement retailer also cut its planned store openings for 2009. "The (U.S.) stimulus efforts will provide some support to the consumer, but today the macro environment shows few positive signs and therefore we continue to plan conservatively," Lowe's Chairman Robert Niblock said during a conference call. Earnings fell 60 percent to $162 million, or 11 cents a share, for the fourth quarter ended January 30, compared with $408 million, or 28 cents a share, a year earlier. Analysts expected profit of 12 cents a share, according to Reuters Estimates. Sales fell 3.8 percent to $9.98 billion. Sales at stores open at least a year fell 9.9 percent. Gross margin contracted to 33.7 percent from 34.9 percent a year earlier, hurt by the price cuts on seasonal merchandise. Lowe's expects pressure on gross margin to ease during the first quarter, but still expects margin to be down for that period. "We think the report reflects the challenge Lowe's faces in continuing to reduce inventory and expenses in line with its third year of declining sales," Sanford Bernstein analyst Colin McGranahan said in a research note. He added that "the company's already lean operating structure will likely limit the extent of expense reductions possible, thereby continuing to put pressure on operating margins." CURBING STORE GROWTH Lowe's and industry leader Home Depot Inc ( HD.N ) have curbed store expansions as the U.S. housing slump and tight credit markets curtailed demand for big-ticket home improvement projects. On Friday, Lowe's said it now plans to open 60 to 70 total stores this year, down from 75 to 85 stores it originally forecast. The fourth quarter marked the sixth-straight quarterly profit fall for Lowe's, and Home Depot is expected to report its 10th-consecutive decline in quarterly earnings on Tuesday. Lowe's forecast profit of 23 cents to 27 cents a share for the first quarter and $1.04 to $1.20 a share for the full year. Analysts expected profit of 32 cents for the first quarter and $1.27 for the full year. Lowe's shares were down 63 cents, or 3.7 percent, to $16.35 in morning New York Stock Exchange trading, while Home Depot was down 24 cents, or 1.2 percent, to $19.92. (Reporting by Karen Jacobs; Editing by Derek Caney )

Opel needs 3.3 billion euro through end 2011: source. Opel is asking for total state guarantees for loans that would amount to around 2.6 billion euros, with contributions in labor cost cuts from its workforce to provide the remaining 700 million euros, the person said. Previously GM Europe President Carl-Peter Forster has said the company was looking for between 1-2 billion euros in loan guarantees from the German state to fund operations during a critical 2009 and 2010 when Opel is set to launch the fourth generation of its best-seller, the Astra hatchback. (Reporting by Christiaan Hetzner )

UBS warns of dire consequences from U.S. tax battle. In papers filed in federal court in Miami, attorneys for UBS said a U.S. government lawsuit filed Thursday could force it to violate Swiss criminal law by turning over information protected by Swiss financial privacy laws. Such a violation would expose UBS employees to "substantial prison terms" as well as fines, penalties and other sanctions," the lawyers said. They said compliance with demands made in the suit filed on behalf of the U.S. Internal Revenue Service would also require UBS, one of the world's largest banking institutions, "to violate Swiss law in a manner that will expose it to penalties, civil liability and the possible revocation of its banking license." The suit came just a day after UBS agreed to pay $780 million and identify some clients in a deal to resolve U.S. criminal fraud charges that it helped wealthy Americans evade taxes. Court papers show the IRS feared it might get details on as few as 12 accounts from the Swiss government versus the 52,000 undeclared accounts that U.S. authorities allege were held by UBS for U.S. customers, however. The lawsuit, paving the way toward what could be a protracted legal fight aimed at lifting the Swiss bank secrecy veil, reaches far beyond the "deferred prosecution" deal settling criminal fraud charges. UBS was given 11 days to respond to the suit and a court hearing in the case could be set for anytime after a status conference with the federal court judge scheduled to take place Monday. In their so-called "background information" paper filed with the court Friday, UBS's lawyers argued that the bank had already cooperated fully with the IRS since it was served with a U.S. summons in July 2008 seeking information on U.S. citizens who failed to report and pay U.S. income taxes. "The IRS now asks this court to place UBS and its employees into an untenable position, stuck between the enforcement power of this court and the criminal law of their sovereign home country," the lawyers said. "Swiss law strictly prohibits UBS and its employees from disclosing to the IRS the account information located in Switzerland that the IRS seeks through its summons," they added. "The IRS's petition does not acknowledge these restrictions and instead simply ignores the existence of Swiss law and sovereignty." (Reporting by Tom Brown ; Editing by Richard Chang )

Stanford's troubles mean polo may lose big backer. Texas billionaire Allen Stanford, whose financial group sponsors numerous polo clubs and events, has been charged by the U.S. Securities and Exchange Commission with an $8 billion securities fraud. The jet-setting 58-year-old tycoon, who has denied any wrongdoing, was served civil papers in Virginia on Thursday by FBI agents. The flamboyant financier's fortune was estimated at $2.2 billion last year by Forbes magazine. He has donated millions of dollars to U.S. politicians, and has secured endorsements from such sports stars as golfer Vijay Singh and soccer player Michael Owen. His sports endorsement deals also likely total in the millions. While Stanford Financial Group backs many sports, including cricket, golf and tennis, polo is unique because it is so niche and beyond the understanding of most Americans. Stanford is also involved with a series of polo teams and venues in the United States, and one major event in the UK. On the company's website, the sport is described glowingly as combining "the techniques of 'riding like a Comanche, thinking like a chess player and hitting like a golf pro while four players try to break your kneecaps.'" Polo was first played in the United States in 1876, coming over from England. Many early polo matches attracted as many as 20,000 spectators, and coverage in the sports pages equal to other major sports. Major events still draw as many as 10,000. Each polo match consists of six chukkers, or periods, lasting 7-1/2 minutes, during which two teams of four ride horses that can be worth up to $200,000. Teams try to score by driving a small white ball into the opponent's goal using a long-handled mallet. "Some people compare it to field hockey on horseback, or soccer," said John Wash, president of operations for the International Polo Club in Palm Beach, Florida. Stanford serves as title sponsor for one of the club's nine fields. Halfway through a match, fans come out on the field for the ceremonial stomping of the divots, where they replace mounds of earth torn up by the horses while also socializing. "Polo is not only a fascinating sport, it is a fascinating society, and for many, the parties and people-watching are as much fun as the game," the Houston Polo Club website said. The sport is expensive, however, as a team owner, or patron, can spend up to $2 million a year, Wash said. Companies spend up to $1 million or more on sponsorships, although most winning teams walk away with nothing more than a trophy or plaque at what are mostly charity events, industry executives said. Nevertheless, polo officials said no single sponsor is so large that his absence would severely hurt the sport. "The sport's been played for thousands of years. It's one of the oldest sports in the world," Wash said. "We have different sponsors that approach us in different categories like any other professional sport," he added. "As we watch this thing play out, it may open the doors for somebody else." Besides, Stanford Financial Group has already paid "a couple hundred thousand dollars" to remain a sponsor this year at the Palm Beach club, whose season runs through April 26 when it hosts the U.S. Open polo championship, Wash said. Stanford Financial has long looked at sports marketing as critical to its growth. "We look to partner with national and international sports organizations that offer a consistently high-quality event experience and premium branding opportunities," Stanford Financial Executive Director Jay Comeaux said in a statement in 2006 announcing a sponsorship deal with a basketball team. The company also has a venue deal with the Houston Polo Club, and sponsors the U.S. Polo Association's U.S. Open and Governor's Cup events, as well as various local and regional U.S. polo matches, according to the company website. It also has been the title sponsor the last four years of the Stanford Charity Polo Day, which is hosted by Prince Charles in aid of the British Forces Foundation. Polo, with 4,000 registered players and almost 300 U.S. clubs, will not fade simply because of the possible loss of one sponsor, said Peter Rizzo, executive director of the U.S. Polo Association. The recession worries him more. "With or without Stanford's sponsorship, the U.S. Open will be played," he said. "Obviously, anything like this (recession) affects our country and the financial well-being of this country is going to affect sports." (Additional reporting by Kylie MacLellan in London, editing by Matthew Lewis)

U.S. halts fraud targeting deaf investors. Since at least September 2007, Hawaii-based Billion Coupons and its chief executive Marvin Cooper raised $4.4 million from 125 investors through personal contacts, seminars at deaf community centers and its website, the SEC and Commodity Futures Trading Commission alleged. The regulators obtained a court order to freeze Cooper and Billion Coupons' assets. The SEC, criticized for not uncovering Bernard Madoff's alleged $50 billion Ponzi scheme earlier, also alleged that Cooper used at least $1.4 million in investor funds for personal expenses. Regulators allege that Billion Coupons and Cooper told investors their funds would be invested in foreign exchange markets and they would receive returns of up to 25 percent compounded monthly from such trading. But instead, Billions Coupons and Cooper lost the small portion of investor funds it invested in foreign exchange trading and failed to generate enough money to pay the purported returns, the regulators said. Billion Coupons and Cooper are charged with operating a Ponzi scheme where earlier investors were paid with money from later investors. Calls to a lawyer for cooper were not immediately returned. (Reporting by Rachelle Younglai ; Editing by Andre Grenon )

Lowe's posts sharp drop in profit. The second largest home improvement retailer, whose shares fell 5 percent in premarket trading, said earnings fell 60 percent to $162 million, or 11 cents a share, for the fourth quarter ended January 30, compared with $408 million, or 28 cents a share, a year earlier. Analysts expected profit of 12 cents a share, according to Reuters Estimates. Sales fell 3.8 percent to $9.98 billion. Sales at stores open at least a year fell 9.9 percent. Gross margin contracted to 33.7 percent from 34.9 percent a year earlier, hurt by the price cuts on seasonal merchandise. Lowe's expects pressure on gross margin to ease during the first quarter. Lowe's and industry leader Home Depot Inc ( HD.N ) have cut store openings as the U.S. housing slump and tight credit markets curtailed demand for big-ticket home improvement projects. The fourth quarter marked the sixth-straight quarterly profit fall for Lowe's, and Home Depot is expected to report its 10th-consecutive decline in quarterly earnings on Tuesday. Lowe's forecast profit of 23 cents to 27 cents a share for the first quarter and $1.04 to $1.20 for the full year. Analysts expected profit of 32 cents for the first quarter and $1.27 for the full year. Lowe's shares were down more than 5 percent to $16.10 in premarket trade. (Reporting by Karen Jacobs ; Editing by Derek Caney )

Nearly 5 million Americans drawing jobless benefits. The data from early February suggested the 13-month-old U.S. recession was deepening, a conclusion supported by a report that showed factory activity in the country's Mid-Atlantic region contracted sharply in February. "The data indicates an accelerated deterioration ... jobs are being lost and the pool of unemployed is growing faster," said Kevin Logan, senior U.S. economist at Dresdner Kleinwort in New York. "People cannot find jobs." U.S. stocks fell as the data reinforced fears the worsening slump would erode company profits, driving the Dow Jones industrial average to 7,465.95, its lowest close since October 2002. Worries about more heavy borrowing to fund the government's efforts to rescue the economy hammered Treasury debt prices. The number of unemployed still on the benefits rolls after drawing an initial week of aid surged 170,000 to 4.99 million in the week ended February 7, the Labor Department said. It was the highest reading on records dating to 1967 and it took the insured jobless rate to 3.7 percent, the highest since 1983, when the economy was emerging from a 16-month recession. New applications for unemployment benefits were steady at 627,000 last week, hovering close to a 26-year high and raising the possibility that job losses in the non-farm sector could cross the 600,000 threshold in February. Steven Wieting, an economist at Citigroup in New York, said the data was "consistent with a very quick sharp rise in the unemployment rate and that's going to continue for the next few months because production data are correcting very sharply." A researcher at the San Francisco Federal Reserve Bank said in a newsletter that U.S. employment would likely have dropped by about 4 percent by the time the recession ends, which would mark the steepest fall in 50 years. The aggressive layoffs and the accompanying insecurity over jobs could lead households, whose net worth has already been eroded by the collapse of the housing and stock markets, to cut spending further, creating a vicious cycle. Washington has put forward an array of measures, including a $787 billion stimulus package, in the hopes of reviving the weakening economy. NEW ORDERS PLUMMET The Philadelphia Federal Reserve Bank said its business activity index, which gauges factory activity in the Mid-Atlantic region, dropped to minus 41.3 in February from a negative 24.3 the prior month. New orders plummeted and the survey's jobs gauge hit its lowest level since the series started in 1968. "The data provides confirmation that the sharply negative growth rate is not showing signs of turning around," said Alan Ruskin, chief international strategist at RBS Greenwich Capital in Greenwich, Connecticut. "On the contrary, it may have turned even a little more negative than the breathtaking collapse witnessed in October-November." In a separate report, the Labor Department said prices received by U.S. farms, factories and refineries rose 0.8 percent in January, the first advance since July as energy prices rebounded. However, the producer price index was down 1 percent from its year-ago level, the largest drop since October 2006. Core prices, which exclude food and energy costs, rose 0.4 percent last month, accelerating from December's 0.2 percent rise. Analysts said last month's producer price gain may have reflected seasonal factors and dismissed it as a signal that inflation pressures were suddenly picking up. "Just about every other measure of inflation that we have seen is showing restrained readings. I don't think it's signaling anything troublesome," said Michael Moran, chief economist at Daiwa Securities in New York. An index from the private-sector Conference Board meant to forecast where the economy is heading rose 0.4 percent in January, the second straight monthly gain. Analysts, however, said the so-called index of leading indicators had been inflated by a rise in money supply as the Federal Reserve pumped billions of dollars into the economy to try to combat the recession. "That's not a sign of good things to come. That's a sign of fear and contraction," said Dresdner Kleinwort's Logan. (Additional reporting by Mark Felsenthal in Washington and Burton Frierson in New York; Editing by Kenneth Barry)

Gold poised to build on gains, Blackrock says. Investment in gold has risen sharply as fears over the stability of the global financial system push investors toward so-called safe-haven assets such as bullion. These flows pushed gold above $1,000 an ounce on Friday for the first time since March 2008. According to Evy Hambro, London-based managing director of BlackRock, the metal could go higher still. "Production is falling, central banks are selling less, gold jewelry demand continues to go well and we have strong investment buying," he said. "If you put all that together, the likelihood of gold moving higher is very high." The current economic climate is fuelling demand for the precious metal, he said. Buying of gold-backed exchange-traded funds has reached record levels, fueled by volatility in other asset prices. UNCERTAINTY "In periods of uncertainty, be it political or economic uncertainty, gold tends to do well," said Hambro. "Whether you have periods of inflation or deflation, gold holds its purchasing power, so it is a very efficient way of storing wealth." "In today's economic environment.... with uncertainty on currency markets, uncertainty on equity markets, uncertainty in the banking system, gold is a natural place for people to turn." Gold miners have not yet lifted their production in response to rising prices, Hambro said, and they are unlikely to do so until prices stabilize at higher levels. "The production of gold by gold mining companies had its largest annual fall in 2008 despite prices being very strong around the world," he said. "Gold production peaked back in 2001 and has been declining almost every year since then." "Until we see a sustainable price at a higher level, it won't encourage the gold companies to activate any growth in supply," he added. "We haven't seen that yet." With the gap between supply and demand set to grow, he said, prices are likely to be forced higher. Hambro said a particularly good omen for gold is bullion's ability to move higher at a time its usual key price driver, the dollar, is strengthening. A stronger dollar usually weighs on gold, which is often bought as an alternative investment to the U.S. currency. However, both assets are benefiting from investors' flight to safety. "The fact that it is doing so well against what is normally an overpowering force -- the U.S. dollar -- shows you just how strong appetite is for gold right now," Hambro said. "Our view is that gold could easily go higher than here." (Editing by Anthony Barker)

Gold rises over $1,000 on haven buying. Long-term inflation worries fanned by the massive U.S. economic stimulus package signed by President Barack Obama this week has driven investors into gold, which is perceived as the most likely asset to hold its value against economic head winds. "I think there's a little bit of panic out there. Equities are setting new lows and gold is the place to run to. I don't think there's much more than that," said Robert MacIntosh, chief economist at Eaton Vance in Boston. Bullion continued to appreciate against other asset classes and commodities on Friday amid renewed fears that the U.S. government could be forced to nationalize banks amid a worsening financial crisis. A ratio of gold against the S&P 500 index rose to its highest level since September 1990, and gold/oil ratio was at its loftiest since December 1998, according to Reuters data. Gold futures for April delivery on the COMEX division of the New York Mercantile Exchange settled up $25.70, or 2.6 percent, at $1,002.20 an ounce. They reached a session high of $1,007.70, their highest price since March 2008. Spot gold hit a peak of $1,005.40, its strongest level since March 18. It was at $993.80 an ounce at 2:42 p.m. EST, up 2.0 percent against $973.75 in New York late on Thursday. The metal is poised to rise further, possibly targeting last March's all-time high of $1,030.80 an ounce, analysts said. OPTIONS BULLISH Gold options market also pointed to sharply higher prices of the metal. COMEX gold floor trader Mihir Dange said that trading of December $1,200 call options were extremely active and that gold rising to between $1,200 and $1,300 by year end "was not unrealistic by any standard." Meanwhile, New York's SPDR Gold Trust, the No. 1 gold exchange-traded fund commonly known as GLD, said its holdings rose nearly five tonnes to a record 1,028.98 tonnes on Thursday, while the iShares Silver Trust's silver holdings climbed 18.4 tonnes to an all-time high of 7,892 tonnes. U.S. equity markets tumbled as much as 3 percent to their weakest levels since November before they partially recovered. Falling stocks boost the appeal of safe-haven assets like gold. However, analysts cautioned that profit taking could be possible in an overbought market. "It's a huge psychological level for traders. The fact that traders have become so bullish in gold, just like any index, we probably are looking at some kind of retracement in the future," said Rob Kurzatkowski, futures analyst of optionsXpress. Among other precious metals, spot silver was at $14.41 an ounce, up 2.9 percent from its Thursday finish of $13.01. Spot platinum was at $1,081.00 an ounce, up 1.4 percent from its previous close of $1,066.50, while spot palladium was at $212.50, down 0.5 percent from its late Thursday New York quote. (Editing by Christian Wiessner )

INSTANT VIEW: Gold rises above $1,000/OZ, nears record. Owning gold is seen as one of the few ways to preserve wealth during the worst financial crisis since the Great Depression. Investors fear the massive U.S. economic stimulus and bank bailout packages will eventually weaken the dollar and cause inflation. They poured money into exchange traded funds and other gold-related assets. Bullion holdings backing New York's SPDR Gold Trust rose nearly five tonnes to a record 1,028.98 tonnes on Thursday. GOLD MARKETS: *COMEX April gold up $21.90 at $998.40 per ounce at 9:08 a.m. EST/ 1408 GMT. *The traded range was $971.50 to $1,000.30, highest price for the active contract since July 16, 2008.. *Spot gold quoted at $995.60/7.20, up from $974.55/975.05 at Thursday's New York close. COMMENTS JEFFREY NICHOLS, MANAGING DIRECTOR, AMERICAN PRECIOUS METALS ADVISORS: "I firmly believe that gold is going much, much higher in the next few years, to levels that many think unimaginable. But markets do not go straight up for long and, when everyone is jumping aboard, watch out for surprises." "The rise in scrap supply along with the decline in fabrication...suggest the price is more vulnerable to a drop off in investment demand, so an easing of investor interest could bring a sizable, though I believe temporary, correction in the yellow metal's price." ZACHARY OXMAN, SENIOR TRADER, WISDOM FINANCIAL, NEWPORT BEACH, CALIFORNIA: "Get used to it ... $1,050, maybe $1,100 an ounce is not out of the realm inside of the next couple of weeks especially if the stock market can put in new lows. "I think what you saw between November and now was just a gigantic bottom bounce in the stock market and now we're hitting the second leg down. This could be the start of a big move in gold. "This is on safe-haven buying. Just wait until we start reinflating from all of this money the government is putting out there. That should fuel it further. GENE MCGILLIAN, ENERGY ANALYST FOR TRADITION ENERGY IN STAMFORD, CONNECTICUT: "All of a sudden the equity market started to turn because some of the concerns about the global economy started to heat up again. Oil has been following that down and gold rallying is a sign that people are worrying about what will happen to the economy." MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BANK OF NEW YORK-MELLON, NEW YORK: "It's a direct barometer of risk aversion reaching elevated levels. That's been pushing the dollar higher across the board this morning, too. "Usually the dollar and gold move in opposite directions, but gold has broken out of this trend recently and is moving counter to other commodity prices based on its status as the safe haven of last resort. "While gold is usually an anti-inflationary hedge, it can work as an anti-deflationary hedge, too. As deflation pushes all prices lower, you want to hold something that retains its value. We're watching a technical resistance line around $1,030, and there are better than even odds that we break through that in the next week." LAWRENCE GLAZER, MANAGING PARTNER OF MAYFLOWER ADVISORS IN BOSTON: "I don't think it (gold hitting $1,000) comes as a huge surprise. The gold trade has almost become the consensus among the talking heads. The fact that it has become consensus is almost as troubling as headlines in the financial sector." "People are buying gold for emotional reasons and on worries about bank nationalization in a reactionary move. There are certainly smart people who are buying it and there were a lot of smart people buying oil at $140 too." "Investors need to recognize that gold has no yield. If you bought gold at the wrong time in the 1980s it took you (about 20) years to get your money back." ROBERT MACINTOSH, CHIEF ECONOMIST AT EATON VANCE IN BOSTON: "I think there's a little bit of panic out there. Equities are setting new lows and gold is the place to run to. I don't think there's much more than that. "I think the relative value of gold to stocks is absurd, but your friend is your friend, if you want gold. Until the economy gets some kind of a perceived improvement, you're going to continue to see this. "It won't be long before people realize stocks are very cheap and are going to find profits elsewhere. Gold is 99.9 percent correlated with equities, and as the markets improve you'll see the prices go down." J TAYLOR, EDITOR OF THE INDUSTRY NEWSLETTER, GOLD & ENERGY STOCKS: "Gold can go to infinity because the paper can go to infinity while they are bailing out everyone and his uncle (stimulus package). "Ever since the Lehman Bros failure, gold has bought twice as much oil, three times as much copper, so $1,000 is just a number. It's a psychological level and probably should have gone there a lot earlier. "Gold has been rising more dramatically than people realize. Gold is still very cheap, nobody knows where it's going." PETER BEUTEL, PRESIDENT/ANALYST AT CAMERON HANOVER IN NEW CANAAN CONNECTICUT "People are trying to find something safe and there is a reaction to an inflationary undercurrent as a result of what we need to do in this economy, if there are a lot of dollars printed for the stimulus. "There is no where else anyone feels safe. There were some signs (in inventory data released Thursday) that oil may be stabilizing, at least demand. But this morning crude oil is lower and the market is still looking at the weakness of the economy." TOM BENTZ, SENIOR COMMODITY ANALYST, BNP PARIBAS COMMODITY FUTURES, INC, NEW YORK, NY "Gold at $1,000 an ounce, another sign of the times. "Obviously in these tough times gold is viewed as a physical store of value as opposed to paper currencies." JIM RITTERBUSCH, PRESIDENT, RITTERBUSCH & ASSOCIATES, GALENA, ILLINOIS: "As long as we make new highs in gold, we're seeing further downward pressure on the oil. In the meantime, the equity markets are sliding further south into new low territory so that just paints a bearish picture here for this oil complex. "Plus we got the march WTI (oil contract) expiring today and I think the longs are going to be more on the shorts and that should give us some lower prices." ROB KURZATKOWSKI, FUTURES ANALYST, OPTIONSXPRESS, CHICAGO: "It's a huge psychological level for traders. The fact that traders have become so bullish in gold, just like any index, we probably are looking at some kind of retracement in the future. But it does show that there is enough buying enthusiasm. The traders are definitely acting defensively, now that stock indices are testing November lows.

Stanford surrendered passport, SEC says. The spokesman, Kevin Callahan, did not specify when or where Stanford and the others gave up their passports. "I can confirm that all three defendants in our case have surrendered their passports," he said in an e-mailed reply to Reuters. The SEC has accused Stanford, 58, of defrauding 50,000 customers around the world in a multibillion-dollar investment scheme. Acting at the SEC's request, FBI agents served Stanford court orders and other documents Thursday in Fredericksburg, Virginia. Stanford is not under arrest and his whereabouts remained unclear. The SEC filed civil charges in Dallas on Tuesday against Stanford and two colleagues, as well as Stanford International Bank Ltd, Stanford Group Co and Stanford Capital Management LLC. The agency accuses them of a "massive, ongoing fraud." Until regulators got help Thursday from the FBI, the SEC had failed to find Stanford. His whereabouts had been the subject of intense speculation since he failed to respond to an SEC subpoena to answer questions about his company's operations. (Reporting by Jim Wolf; Editing by Lisa Von Ahn, Bernard Orr )

Stanford wooed clients, top staff with sweet perks. Few have ever gained access to the plush Stanford Group offices in Houston's upscale Galleria area, the U.S. headquarters where the Texas billionaire carried out what the Securities and Exchange Commission called a "massive ongoing fraud" through the sale of $8 billion in high yield certificates of deposit. But Mark Tidwell, 40, a former senior vice president at Stanford, who has filed a whistleblower lawsuit against the company, recalls a plush dining room with a new menu every day, and perks aplenty for employees fortunate enough to make the "Top Producers Club." "You know it's different when you pull in because there is a security guard that greets every car that pulls into the parking garage," Tidwell told Reuters in an interview at a Houston law office. Potential clients arriving at Stanford's Houston office found a parking space with their name on it and were met at the door. Once inside the confines of the building, bedecked outside with palm trees and tropical flowers, there were dark granite floors and a sea of mahogany walls. As they were ushered to the auditorium to watch a 10-minute video about the history of the company -- which traces its roots back to the Great Depression -- clients might have walked by Stanford's personal office, also on the first floor. However, Tidwell despite being a senior executive never got invited into Allen Stanford's inner sanctum. "No one really gets to go in there but it's about half of the first floor," Tidwell said. But not to worry. After watching the video, potential clients were led to the a private dining room called the Eagle Room, which featured a different menu every day, white linen tablecloths and award-winning chefs. "There is a lot of direct attention being given to folks," Tidwell said. U.S. law enforcement officials found Stanford in the Fredericksburg, Virginia, area on Thursday, and served the jet-setting 58-year-old tycoon with a complaint accusing him of the fraud. He was knighted by Antigua and Barbuda in 2006 to become Sir Allen Stanford. Stanford's financial empire is now in the hands of a judge-appointed receiver, after federal agents raided Stanford Group offices in Houston, Miami and other U.S. cities earlier this week. Allen Stanford himself interacted with employees occasionally but "it is brief, it is limited," said Charles Rawl, who is also a part of the whistleblower lawsuit along with Tidwell. "He didn't want to have much to do with us," said Rawl, who was a financial adviser with Stanford Group Co. In the lawsuit, the two say they were forced to resign to avoid participating in illegal business practices. Tidwell, who sold investments for the Antiguan-based Stanford International Bank, said he had more interactions with Stanford because the banking arm of the businesses was "his baby." Stanford personally attended most meetings of the "Top Producers Club," which convened in cities across the world to toast the company's top sellers, Tidwell said. In their elegance, the meetings, which occurred in cities like Geneva, New York, Houston and the Mexican resort town of Puerto Vallarta, were "borderline on Disneyworld," Tidwell said. He said he eventually stopped attending the meetings because they had low business value. "It was really an opportunity to brag and talk about how everybody did for that particular quarter," Tidwell said. (Reporting by Chris Baltimore; editing by Richard Chang )

GM's Saab estimates '08 loss at about 3 billion SEK: filing. Saab Automobile said earlier on Friday it would file for reorganization with a local Swedish court, a legal procedure to give it protection from creditors while it seeks funding from both public and private sources and restructures. "The estimated, still unaudited loss for 2008 amounts to 3 billion crowns. The current outlook for 2009 suggests a similar level of losses and associated funding requirements," Saab said in the document filed with the court. The company said GM had notified the company that it would not fund further projected losses at Saab, but that it would provide liquidity for the company to pursue a reorganization. (Reporting by Victoria Klesty)