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Credit Suisse says NY mortgage case too little, too late. In a Monday filing in the New York State Supreme Court in Manhattan, Credit Suisse said the attorney general waited too long, was precluded by federal law, and was not specific enough in detailing the alleged wrongdoing to allow the case to go forward. Schneiderman sued in November, accusing Credit Suisse of misrepresenting the quality of loans underlying securities it sponsored and underwrote in 2006 and 2007. But Credit Suisse said the lawsuit substantially mimicked other lawsuits filed as much as five years ago, and used "hindsight" to buttress stale claims that could ultimately only benefit sophisticated investors, who should have known the securities were risky to begin with. "It is striking how threadbare the allegations are even with all of the extra time the NYAG took to file it," the bank's lawyers wrote. Damien Lavera, a Schneiderman spokesman, said the attorney general is confident he will prevail, and hold accountable "those responsible for the misconduct that led to the crash of the housing market and the collapse of the American economy." Schneiderman is co-chair of a state-federal task force including the U.S. Securities and Exchange Commission, that is investigating misconduct in the packaging and sale of mortgage-backed securities that helped lead to the financial crisis. The SEC in November reached a $120 million settlement with Credit Suisse, and the bank said Schneiderman's lawsuit rehashed some claims addressed in that accord. Credit Suisse also said the lawsuit was barred by a three-year statute of limitations and by the National Securities Markets Improvement Act of 1996, which preempts state securities laws. Schneiderman has argued that a six-year statute applies. In October, Schneiderman sued JPMorgan Chase & Co over mortgage-backed securities created by Bear Stearns Cos, the investment bank it acquired in 2008. The JPMorgan case was the first lawsuit to come out of the task force. JPMorgan is trying to dismiss that case, raising some of the same arguments as Credit Suisse. The case is People of the State of New York v Credit Suisse AG, New York State Supreme Court, New York County No. 451802-2012. (Reporting by Karen Freifeld; Editing by Leslie Gevirtz )

China issues plan to rejuvenate old industrial base. The plan, to run from 2013 to 2020, covers 95 prefecture-level cities and 25 municipalities and capital cities that were once the core of China's heavy industrial base. A blueprint issued in November 2011 covered 62 cities. The NDRC said in a statement on its website that investments would be made to help former industrial centres upgrade technology while also providing financing support and encouraging financial innovation - including bond issuance - to raise capital for the program. The regeneration plan also envisages increased fiscal revenue transfers to fill pension fund shortfalls and to cover redeployment costs of worker lay-offs at state-owned firms. The NDRC statement set out a raft of targets for cities covered by the plan. By 2017, high technology industries must account for 17.8 percent of the total production in the reformed areas, while services must be 45 percent of total output. Water consumption per unit of industrial output must be cut by 32 percent from 2012 levels, while energy consumption for per unit of GDP must be reduced by 18 percent. Annual personal disposable income for those cities is targeted at 29,900 yuan ($4,822) by 2017 and 13 million new jobs will be created during the same period. The government wants cities in the program to develop new strategic industries in fields such as advanced equipment manufacture, new materials technology, energy conservation, bio-technology, clean energy vehicles and information technology. Beijing kicked off a strategy to revitalize the old industrial "rust belt" in northeast China in 2003, expanding it to the central and western provinces, including Hubei and Henan, in 2010. The northeastern Chinese provinces of Heilongjiang, Jilin and Liaoning served as the industrial engine for the country's national reconstruction in the 1950s and were among the hardest hit by the economic reforms pursued by former paramount leader, Deng Xiaoping and former premier, Zhu Rongji. China's new leaders - President Xi Jinping and Premier Li Keqiang - have put renewed emphasis on rebalancing the world's second biggest economy away from a reliance on investment and exports for growth and towards domestic consumption fuelled by a fresh urbanization drive over the next decade. (Reporting by Aileen Wang and Nick Edwards ; Editing by Kim Coghill)

BofA settles for $165 million with credit union regulator. In February, the bank disclosed it had reached a preliminary agreement with the National Credit Union Administration, and said it would be covered by existing reserves, but did not disclose a value at the time. The settlement adds to a growing list of mortgage-related legal troubles Bank of America has been able to put behind it, after sustaining more than $40 billion in losses from its home loan business since the financial crisis. Most of those losses stemmed from its 2008 purchase of Countrywide Financial, once the largest U.S. subprime mortgage lender. The new settlement is intended to resolve claims concerning mortgage securities offerings that the regulator had threatened to sue the bank and its Countrywide and Merrill Lynch units over, Bank of America said in its annual report. A bank spokesman declined comment on Tuesday beyond the earlier filing. The credit union regulator did not release settlement papers and declined to provide additional details about the deal. In recent months, Bank of America has moved closer to ending its mortgage troubles, with more than $14 billion in settlements announced in January alone. Around $3 billion went to end a loan-by-loan review of past foreclosures mandated by the government. Another $11.6 billion went to resolve allegations from government mortgage finance company Fannie Mae that the bank improperly sold mortgages that later soured, and to resolve questions about foreclosure delays. The bank has also sought to sign a $8.5 billion settlement to resolve claims from private investors who purchased toxic securities, but that deal is still awaiting approval in New York state court. The credit union regulator previously indicated it objected to that proposed deal, but on Friday it withdrew its notice of intent to object without providing a reason for the change. RECOVERING LOSSES Separately, the regulator has filed 10 lawsuits against banks - including units of JPMorgan Chase & Co ( JPM.N ), Barclays ( BARC.L ), Credit Suisse ( CSGN.VX ), Goldman Sachs ( GS.N ) and Royal Bank of Scotland ( RBS.L ) - over mortgage-backed securities they sold to corporate credit unions that later collapsed due to losses on the securities. A consolidated hearing in the cases is scheduled for April 29 in Kansas federal court, where the lawsuits are filed. The regulator has settled similar claims against Citigroup ( C.N ), Deutsche Bank ( DBKGn.DE ) and HSBC ( HSBA.L ) for a total of$170 million, with Deutsche Bank paying around $145 million. The National Credit Union Administration has been trying to recover losses related to the failure of five institutions that it seized in 2009 and 2010 after they ran into trouble due to the crumbling housing market. The wholesale credit unions have experienced more troubles than their retail counterparts because they did not face the same restrictions on permitted investments, leading to big losses during the financial crisis. "We have a statutory obligation to secure recoveries for credit unions and ensure that consumers remain protected," Debbie Matz, the chairman of the regulator's board, said in the statement announcing the Bank of America settlement. "We will continue to expend every possible effort to fulfill that important responsibility." Bank of America did not admit fault as part of the settlement, the credit union regulator said. (Reporting by Aruna Viswanatha; Editing by Gerald E. McCormick, John Wallace and Bernard Orr )

Euro zone jobless rate steady at 12.0 percent. The February number was in line with expectations of economists polled by Reuters, and remained unchanged from January's figure, which Eurostat revised up to 12.0 percent. Data from the bloc of 17 countries using the euro showed another 33,000 people out of work in February, almost 1.8 million more than in the same time last year. Unemployment of under 25s rose to 23.9 percent in the euro zone, with rates in Greece and Spain remaining over 50 percent. After three years of austerity policies to tackle the economic crisis in the European Union, some politicians have warned that cost-cutting measures which raise unemployment could result in the rise of populist governments. "Prolonging austerity today risks not achieving a reduction in deficits but the certainty of making governments unpopular so that populists will swallow them whole when the time comes," French President Francois Hollande said last week. The dire social impact of Europe's economic situation may give an impetus for the ECB to cut interest rates when central bank governors meet on Thursday. For further details of Eurostat data click on: here (Reporting By Ethan Bilby ; editing by Jan Strupczewski )

Factory orders rise, boosted by aircraft. The Commerce Department on Tuesday said orders for manufactured goods climbed 3.0 percent. Economists polled by Reuters had forecast orders advancing 2.9 percent. Factory orders were boosted by the aircraft industry, which is prone to sharp swings. Civilian aircraft orders surged 95.1 percent. U.S. manufacturer Boeing had previously reported orders in February for 179 aircraft, up from two a month earlier. Stock prices extended gains following the data's publication. Gains in new orders were modest when stripping out more volatile categories. Orders excluding transportation equipment increased just 0.3 percent. Data on Monday showed slowing growth of factory activity in March, suggesting the economy lost some momentum at the end of the first quarter as the effects of tighter fiscal policy started kicking in. The factory orders data suggested some of the slowdown due to the fiscal restraint was present in February as well. Orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans - declined 3.2 percent instead of the previously reported 2.7 percent drop. However, this measure of core factory orders has also been quite volatile in recent months. In January, it rose 6.7 percent, the biggest gain since March 2010, according to revised readings. Other data this year has shown little sign that higher taxes, and the $85 billion in across-the-board government spending cuts that took effect March 1 known as the "sequester," have weighed on economic activity. The Commerce Department also said orders for durable goods, manufactured products expected to last three years or more, rose 5.6 percent instead of the 5.7 percent gain reported last week. (Reporting by Jason Lange ; Editing by Neil Stempleman )

AstraZeneca suffers fresh drug patent setback in U.S.. The ruling comes as AstraZeneca is already facing a big fall in sales due to patent expiries on other medicines, prompting a $2.3 billion restructuring plan and further job losses announced by new CEO Pascal Soriot last month. AstraZeneca said on Tuesday it strongly disagreed with the court's decision and was considering next steps, including lodging an appeal. The District Court for the District of New Jersey ruled in favor of Actavis, which has developed a generic version that it now intends to launch immediately. The verdict will not change AstraZeneca's revenue guidance for 2013, which is that the company anticipates a mid to high-single digit decline in sales. But Britain's second-biggest drugmaker said additional generics entering the U.S. market would materially impact royalties received on sales of Teva's existing generic version of Pulmicort Repsules. Teva already has a generic on the market following an earlier deal with AstraZeneca. Total branded and generic sales of Pulmicort Repsules were around $1.2 billion in the United States in the 12 months to January 2013, according to Actavis. (Reporting by Ben Hirschler ; Editing by Louise Heavens)

Wall Street climbs with health insurers, S&P nears high. The S&P 500 closed at another record high, though it fell short of breaking above its all-time intraday high of 1,576.09. The Dow also ended at another record high. The U.S. government dropped plans to cut payments for private Medicare Advantage insurers and instead said it would allow a 3.3 percent raise. The news boosted shares of some health insurers, including Humana, which derives about two-thirds of its revenue from Medicare Advantage business. Humana's stock jumped 5.5 percent to $79.11 and was among the biggest percentage gainers on the S&P 500. UnitedHealth Group gained 4.7 percent to $61.74, while the S&P 500 healthcare sector index jumped 1.4 percent. "They didn't expect the result that they got. That will help with their bottom line," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey. Strengthening U.S. data has helped stocks rally since the start of the year. On Tuesday, U.S. data showed February factory orders rose 3 percent, slightly above expectations. That follows a weak reading on U.S. manufacturing on Monday that sparked a pullback in stocks. The S&P 500 is now up 10.1 percent since the start of the year. For the day, the Dow Jones industrial average was up 89.16 points, or 0.61 percent, at 14,662.01. The Standard & Poor's 500 Index was up 8.08 points, or 0.52 percent, at 1,570.25. The Nasdaq Composite Index was up 15.69 points, or 0.48 percent, at 3,254.86. The S&P 500 surpassed its 2007 closing high last Thursday, while the Dow first broke above its 2007 record on March 5. Stocks pared gains late in the session, giving investors another reason to question the strength of the recent rally. "The recent legs of this rally have lacked a bit of conviction," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. "What's been leading equity markets has been more defensive sectors." Healthcare sector stocks are still seen as cheap relative to the overall market. Humana, which has a market cap of about $11.9 billion, has a forward price-to-earnings ratio of 9.4, below the S&P 500 P/E average ratio of about 16.5. UnitedHealth has a P/E ratio of 10.6 and Cigna has a P/E ratio of 9.7. "We do think that healthcare stocks are a nice combination of dividend yields, growth and low valuations and we are very constructive on the sector," said Jim Russell, senior equity strategist for U.S. Bank Wealth Management in Cincinnati. Other big gainers in the healthcare sector included shares of Cigna, up 2.9 percent at $64.75. Most investors expect moves to be limited this week before Friday's U.S. monthly payrolls report. The March jobs report could give clues on how successful the Federal Reserve has been in lowering unemployment, one of the primary headwinds for the economy. About 200,000 jobs were created last month, according to a Reuters poll, down from 236,000 in February. The unemployment rate is expected to come in at 7.7 percent, unchanged from the previous period, the poll showed. In an effort to bring down the unemployment rate, the Fed has maintained an accommodative monetary policy, which has also benefited stocks. Overseas, Cyprus concluded bailout talks. The deal, which still requires ratification, would mean the country receives a 10 billion euro loan and will have until 2018 to carry out measures to shore up its finances. The country's finance minister resigned after concluding the deal. Other gainers included Hertz Global Holdings shares, up 6.8 percent to $23.41, after the company forecast strong earnings and revenue through 2015 due to increasing global demand for car rentals and benefits from its recently completed acquisition of Dollar Thrifty. Among decliners, Delta Airlines Inc shares were off 8.1 percent at $14.94. Delta's unit revenue for March rose at a slower pace than in the prior two months. Shares of Nasdaq OMX Group Inc plunged 12.8 percent to $27.91 after agreeing to buy a BGC Partners Inc trading platform. BGC shares were up 48.6 percent at $5.72. Shares of Hewlett-Packard fell 5.2 percent to $22.10 after Goldman Sachs downgraded them to "sell." Volume was roughly 5.9 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, below the 2012 average daily closing volume of about 6.45 billion. Decliners outpaced advancers on the NYSE by about 15 to 14 and on the Nasdaq by about 13 to 10. (Additional reporting by Angela Moon ; Editing by Kenneth Barry and Nick Zieminski)

Baer says Merrill Lynch unit integration on track. The Swiss bank said on Tuesday the transfers would substantially boost its businesses in South America and Monaco. "Moreover, we enter the market in the important financial center Luxembourg with a substantial client base, which also opens up new business opportunities," said Baer Chief Executive Boris Collardi in a statement. Baer closed its purchase of Merrill Lynch's wealth management business outside of the United States and Japan in February, with the aim of expanding in fast-growing emerging markets and strengthening its business in more mature ones. Baer said it would also transfer other major former Merrill Lynch businesses in Hong Kong, Singapore and the UK later this year. It said it expects the integration to be complete in the first quarter of 2015, with most large businesses to be transferred this year. (Reporting by Martin de Sa'Pinto ; Editing by David Cowell)

Judge dismisses suit against Paulson for China bet. An amended order was entered on March 31, 2013, granting Paulson's motion to dismiss the case, court papers show. Hugh Culverhouse, whose family had once owned the Tampa Bay Buccaneers football team, sued Paulson a year ago over the Sino-Forest investment, which turned into one of the hedge fund's biggest losses. The judge ruled that Culverhouse did not have the standing to sue and claim a fiduciary relationship with Paulson. "We are pleased with the judge's ruling," a spokeswoman for Paulson said on Tuesday. "We have stated from the outset that this suit was completely without merit and that there was no basis in law or fact for the action." Paulson's New York-based firm, Paulson & Co, invests roughly $18 billion and has been watched closely ever since well-timed bets against the overheated housing market earned the fund and its founder billions in 2007 and 2008. But the hedge fund's reputation was dealt a blow when Sino-Forest's stock price tumbled after a short-seller published a research report alleging improper accounting at the Chinese forestry products company. By 2011, Paulson's Advantage and Advantage Plus funds owned roughly 14 percent of Sino-Forest's shares and the drop in the stock price after the Muddy Waters report was released left Paulson & Co with paper losses of roughly $500 million. Culverhouse, who was a former federal prosecutor, accused Paulson's firm of "gross negligence," saying the fund manager failed to analyze "the substantial risks of holding a near-billion-dollar investment in a forestry company based in China" before investing in Sino-Forest. His lawsuit sought class-action status for fund investors, as well as compensatory and punitive damages. The complaint does not say how much Culverhouse and other investors lost. A person familiar with Paulson's funds said the net total loss on Sino-Forest ended up being around $100 million. In addition to the Sino-Forest investment, Paulson's ill-timed bets on an economic recovery, which included losing investments in Bank of America Corp ( BAC.N ), made for even bigger losses in 2011. The Advantage Plus fund ended 2011 down more than 50 percent. Since then, Paulson has struggled to recoup the magic his investments had only a few years before. This year, returns at his funds have been mixed in the first two months, with his gold fund suffering double digit losses through the end of February, while his merger arbitrage oriented Paulson Partners Enhanced fund gained 7.7 percent. First quarter 2013 returns have not been tallied yet. The case is Culverhouse v. Paulson & Co et al, U.S. District Court, Southern District of Florida, No. 12-20695. (Reporting by Svea Herbst-Bayliss. Additional reporting by Jon Stempel. Editing by Andre Grenon)

Exclusive - Pfizer, Novartis, Abbott weigh bids for Brazil's Ache - sources. Pfizer Inc, Novartis AG and Abbott Laboratories are all weighing second-round bids to acquire the company, which boasts a strong position in Brazil's fast-growing pharmaceuticals market, the people said. Bids are due in the second half of April, two of the people said, asking not to be identified because the auction is not public. Privately owned Ache is attractive to drug companies looking to increase their footprint in the growing market of Latin America. But one of the families that own the company has said it would like to hold on to its stake, and uncertainty has deterred some potential bidders. GlaxoSmithKline showed early interest but has dropped out of the running, the people said. Officials for the multinational companies all declined to comment. People close to the process told Reuters in February that families with large share holdings in Ache had asked investment bank Lazard Ltd to explore a sale, although whether a deal will go ahead remained uncertain given divisions among the families controlling the company. The Baptista and Siaulys families, who hired Lazard, are ready to sell up but the Depieri family would like to hold on to its stake, sources said. "People are a bit worried about the situation surrounding the families selling it and are wondering if they are ever going to be satisfied with the price. Some people who were interested have pulled out for that reason," one source said. Lazard has declined to comment on the bank's role in the process and an Ache spokesman reiterated the position that the company is not for sale. Ache ranks fourth in terms of overall Brazilian drug sales but is the leader in prescription medicines and is also active in the rapidly expanding over-the-counter (OTC) business. "Every large pharmaceutical company wants to get into emerging markets and Ache is the crown jewel asset in Brazil," said one industry banker, who wished to remain anonymous because he is not allowed to speak to the media. Ache's earnings before interest, tax, depreciation and amortization (EBITDA) for the current year are expected to be around $300 million and the company's owners are seeking a lofty "high-teens" multiple of EBITDA in any sale, people familiar with the matter have said. A multiple of 15 to 20 times would suggest a price tag of $4.5 billion to $6 billion. (Reporting By Jessica Toonkel in New York and Ben Hirschler in London; Editing by Soyoung Kim , David Gregorio , Gary Hill )

Analysis: BoJ's Kuroda tested by divided board. Conversations with sources since last week have thrown up the possibility that Kuroda may not be able to sway a board divided on how much the BOJ should ramp up bond buying and how to convince markets it will not monetize public debt. Just two weeks into the job, Kuroda told parliament on Tuesday he wants to combine the BOJ's two bond-buying operations to clarify how much it is expanding its balance sheet, and that he would debate with the board targeting longer-dated bonds in expanding stimulus. But failure to mend the gap with board members before Thursday's decision would mean Kuroda, who has promised to do whatever it takes to restart Japan's economy, would either have to put off some of his plans until another rate review on April 26, or push them through at the risk of a split vote. The sources familiar with the BOJ's thinking said Kuroda was likely to muscle through most of his plans, but a split vote would test his leadership and cast doubt on whether he can commit the BOJ to further unorthodox measures. "The BOJ doesn't necessarily have to decide on everything this week. Trying to do so could expose to markets the rift within the board," said Yasunari Ueno, chief market economist at Mizuho Securities in Tokyo. "In any case, there's simply not enough time to discuss so many factors that come into play. The key is how Kuroda manages to sustain market expectations." The BOJ is likely to start open-ended asset purchases immediately, rather than in 2014, boost bond buying and extend the maturity of bonds it buys in easing policy this week, ideas that have been floated on the board even before Kuroda joined the central bank, sources have told Reuters. Delaying a makeover of the BOJ's policy framework is unacceptable for Kuroda, who has a mandate from Prime Minister Shinzo Abe to engineer a "regime change" from his predecessor's cautious, gradual approach. But Kuroda's idea of combining two bond-buying programs may face resistance from some in the board wary of loading up the central bank's balance sheet with too much long-term debt. "In the end, Kuroda is one of nine board members that make a decision," another source said. SEEKING ALTERNATIVE Markets have started bracing for the possibility the BOJ may not decide on everything in one go, paring some of the exuberance that last month knocked the yen to a 3-1/2 year low against the dollar and pushed stocks to 4-1/2 year highs. On Tuesday the yen rose to a one-month high, and the stock market fell to a four-week low. Under pressure from Abe for bolder efforts to beat deflation, the BOJ eased policy in January and doubled its inflation target to 2 percent, a level Kuroda has since pledged to achieve in two years -- a target many see as overly ambitious. Since assuming the post on March 20, Kuroda has said he will do whatever it takes to achieve the price target. Analysts say it would be tough to surprise markets given they have priced in ideas such as bringing forward the timing of open-ended bond buying and setting a new policy target focusing on the size of BOJ's balance sheet. The sticking point is the framework in which to buy assets. Kuroda wants to combine the asset-buying and lending program, the BOJ's key monetary easing tool, and a separate bond-buying scheme dubbed "rinban," which is part of its market operations but not categorized as monetary easing. The asset-buying program only targets bonds with maturity of up to three years, while the rinban targets bonds across the yield curve, including those with duration of over 10 years. Combining the two would allow the BOJ to buy long-term bonds in huge amounts. This mean the BOJ will scrap a self-imposed rule, called the "bank note" rule, that caps the balance of its bond holdings to the value of bank notes in circulation. Board member Sayuri Shirai supports the idea but some on the board fret about scrapping the rule without coming up with an alternative guideline to prevent the BOJ from going on an excessive bond-buying spree. Kuroda has only said that he would discuss the topic with the board, but discussions may take longer than he wants. "It may be easy to get rid of the rule. But the idea behind it -- that there needs to be some restraint in how much bonds the BOJ buys -- must be respected," another source said. (Additional reporting by Tetsushi Kajimoto ; Editing by John Mair )

Penney CEO gets no bonus, stock award after dismal year. Johnson, who oversaw the development of Apple Inc's ( AAPL.O ) retail business before becoming Penney's CEO in late 2011, unveiled a plan last year to reinvent the 111-year-old retailer. The plan included the elimination of most discounting, a move that contributed to a 25 percent drop in sales last year. Johnson's base salary was unchanged at $1.5 million, but he received no bonus or stock award in 2012 because of Penney's results, Penney said in its filing. He was eligible in 2012 for a bonus of $1.875 million. Last year, his total compensation included a stock award worth $52.7 million to make up for incentives he was giving up by leaving Apple. Johnson's 2012 compensation included $344,213 for personal use of a corporate jet. Johnson commutes to Penney's Plano, Texas, headquarters every week from his home in California. That amount is similar to the personal use of a corporate jet by Johnson's predecessor Myron Ullman in 2011. A source told Reuters in April that, after a disastrous first year for Johnson's turnaround, the executive might only have a few more months to carry out his vision of turning Penney stores into emporia offering trendy but low-price items. If Johnson quits or is fired, he will not get a golden parachute. He would only receive $5,000 and restricted stock worth $106,424 as part of a package worth $148,924 in all, according to a proxy statement filed with the U.S. Securities and Exchange Commission. In his annual letter to stockholders, Penney Chairman Thomas Engibous limited himself to inviting them to Penney's annual meeting in Plano on May 17, in contrast to a seven-paragraph note last year touting Johnson's turnaround plan. Penney's board renominated all 11 of its current directors for another one-year term, choosing not to fill a spot vacated by the death in August of longtime board member Burl Osborne. None of Penney's executive officers got any 2012 cash bonuses. Former Penney President Michael Francis, who left in June after only 9 months with the company, was given a termination fee of $3.6 million. Penney shares slid 44 percent in 2012 and have fallen 26 percent so far in 2013. (Reporting by Phil Wahba and Dhanya Skariachan in New York; Editing by Bernard Orr and Andre Grenon )

UBS wins bid to seal cases of dismissed Singapore FX traders: sources. UBS argued in an affidavit last month that premature disclosures regarding the bank's investigation into the two former traders would hamper its ongoing probe, as well as a review under way globally by regulators who are looking into the manipulation of rate fixings. The two traders, Mukesh Chhaganlal and Prashant Mirpuri, are suing the Swiss bank in separate cases for wrongful dismissal, saying they were sacked in order to lessen UBS's role in the alleged manipulation of currency reference rates in Singapore. "The court has ordered the cases to be sealed," one of the sources told Reuters on Tuesday. The sources declined to be named because they were not authorized to talk to the media. A Singapore-based UBS spokeswoman declined to comment. In affidavits filed on March 22, UBS lawyer Sannie Sng said the traders were terminated as a "result of serious misconduct" and that it intends to defend itself against the lawsuit. The traders have said UBS never provided them with reasons for their dismissal. The Monetary Authority of Singapore (MAS) ordered banks that help to set local interbank lending rates and currency reference rates to review the fixing process last year as U.S. and British regulators cracked down on the widespread manipulation of Libor, a benchmark used to set interest rates for around $600 trillion worth of securities. UBS was fined $1.5 billion in December last year for its role in a multiyear scheme to manipulate the London interbank offered rate (Libor) and other benchmark interest rates. The two traders filed lawsuits at the end of February, seeking damages including salary in lieu of notice and shares they said would have been due them under the bank's equity ownership program had they not been fired. Bloomberg News reported earlier that the documents were sealed after a closed hearing at Singapore's High Court on Tuesday. (Reporting by Saeed Azhar; Editing by Michael Flaherty and Edmund Klamann)

ANA to put pilots through Dreamliner resumption training: sources. The Japanese carrier, known as ANA, is also likely to use the Dreamliner initially for cargo flights once the new battery system is installed, to reassure the public about safety before restarting passenger flights, one of the sources said. Regulators grounded all 50 Dreamliners in use by airlines worldwide in mid-January after lithium-ion batteries overheated on two separate aircraft, on a Japan Airlines jet parked at Boston's Logan airport and on an ANA flight in Japan. ANA operates 17 of the carbon-composite jets and has canceled more than 3,600 flights through the end of May. Anticipating regulatory clearance, ANA will put its roughly 200 Dreamliner pilots through flight resumption simulator training so that they will be ready to fly the jets again in June, the sources with knowledge of ANA's operations said. Since the Dreamliner was grounded, the pilots have been undergoing simulator training every month, but their next training will be specifically for flight resumption, the sources said. The training will start around mid-April, one of the sources said. "The company is making as many assumptions as it can and is preparing based on them. In order to resume flights from June, it needs all 200 of the pilots ready to be flying by then," a source said. The sources declined to be identified because they were not authorized to speak publicly about the matter. Without having found what caused the battery incidents in January, Boeing last month unveiled a new battery system and predicted the 787 could be back in the air within weeks, which drew skepticism from some experts and regulators. ANA said last week that it was including Dreamliner jets in its June flight schedules. "It's not that we have decided to resume flights, but rather that we have not decided on cancelling flights," spokesman Ryosei Nomura told Reuters. He added that he had not heard anything about the flight resumption simulator training. BOEING TESTS Boeing is conducting ground and flight tests to check the new lithium-ion battery system that it plans to install in the Dreamliner jets. The results will be submitted to the U.S. Federal Aviation Administration, which will decide whether to certify the fix. "More than half of the testing is complete with the remaining ground and flight tests set to occur within the next several days," Marc Birtel, a spokesman for Boeing, told Reuters by email. Boeing is planning to conduct one more test flight, and the data collected from the flight will be submitted to the FAA. Once the FAA certifies the fix, Boeing will have its engineers install the new battery system in the grounded jets. "Our baseline plan is to deliver the new battery systems in roughly the same order as initial deliveries," Birtel said. ANA, as the launch customer, will be the first to have its jets fixed. It is still unclear how long the FAA will take to approve Boeing's battery fix. After the FAA's certification, Japan's Civil Aviation Bureau is likely to certify the fix around the same time. The U.S. National Transportation Safety Board, which is investigating the Dreamliner's battery trouble, is conducting a two-day forum on April 11-12 to examine the design and performance of lithium-ion batteries in transportation, as well as a separate hearing on April 23-24 on the 787 battery. The NTSB is likely to make non-binding recommendations to the FAA at the end of an investigation. The two agencies work closely together. CARGO FLIGHTS A few dozen Boeing engineers are already in Japan so that they can start work on the battery fix as soon as approval is received, the sources said. ANA estimates it may take a month to install the new battery system for its 787 fleet. Once the new systems are installed, ANA is likely to bring the Dreamliner back into the air first by flying a domestic cargo route between Tokyo and Naha, in the southern islands of Okinawa, one of the sources said. "By making a track record, the company wants to provide a sense of security to passengers. What it is concerned about is whether passengers will fly the Dreamliner like they did before," the source said. ANA spokesman Nomura said that initially flying the Dreamliner to carry cargo was among the carrier's options. Before the grounding, ANA used the Dreamliner about twice a week to carry cargo between Tokyo and Naha. "We will probably conduct test flights before carrying passengers onboard. Some, though not all, of the pilots will have to fly in order to keep their pilot's qualifications," Nomura said. He declined to comment on details of the possible test flights. Other airlines have so far kept the Dreamliner out of their flight schedules. United Continental Holdings has removed its six Dreamliner aircraft from its flying plans through June 5. Poland's LOT, which has received two of the jets, said it does not plan to fly its Dreamliners until late October. The president of Japan Airlines, which owns seven Dreamliner jets, said last month that he was not thinking of exactly when flights would resume. (Additional reporting by Mari Saito in Tokyo, Alwyn Scott in New York and Andrea Shalal-Esa in Washington; Editing by Chris Gallagher )

GM recalls some 2013 Buick Encores for loose steering wheel. The recall affects 144 Encores equipped with heated steering wheels and built between December 9 and December 28, GM said in a filing with the National Highway Traffic Safety Administration. The Encore, a new compact crossover vehicle introduced in January by Buick, is built by GM Korea. A companion model is sold by GM in Europe as the Opel Mokka. GM in its filing said a steering wheel fastener on the Encore may not have been properly installed. In a statement Tuesday, GM said "there are no known injuries or crashes related to the issue." The company said it had contacted 59 customers who had taken delivery of Encores with heated steering wheels "and their vehicles are being inspected." GM said the other 85 unsold vehicles were being inspected at Buick dealerships "and none have been found to have the issue." (Reporting By Paul Lienert in Detroit; Editing by Gerald E. McCormick)

Hiring in March could point to firming economy. Companies and governments probably added a net 200,000 workers to their payrolls last month, according to a Reuters survey of economists. That would be below the 236,000 jobs created in February but well above what has passed for normal in recent years. Since the country emerged from a deep recession and payrolls began growing again in 2010, hiring has averaged just 159,000 per month. "Labor markets appear to be improving," UBS economist Kevin Cummins said in a research note. The Labor Department will release the March employment report on Friday at 8:30 a.m. The improvement in the jobs market, which is not expected to lower the unemployment rate from 7.7 percent, could fuel more discussion at the Federal Reserve over whether the central bank should dial back a stimulus program under which it buys $85 billion in government and mortgage bonds every month. Some Fed officials have said the time for reducing stimulus could come soon. However, it remains to be seen if the pace of job market healing will be sustained, a condition Fed Chairman Ben Bernanke has insisted on before he will support easing back on monetary support. Bernanke has voiced concern that the spending cuts - which began in January and accelerated in March - could place substantial strain on the economy. In addition, there has been little sign a January tax increase has dealt a major blow to U.S. families, and the employment report is expected to show some gains were driven by household demand. JPMorgan, for example, reckons 40,000 new jobs were added last month in the construction sector, a product of what appears to be a growing recovery of the housing market. February was the best month for job creation in construction since 2007. Manufacturers also added jobs. "We believe these trends carried over into March," JPMorgan economists said in a research note. Manufacturing grew more slowly in March, but the analysts polled by Reuters nonetheless see employment in the sector rising by 10,000. Another indicator of labor market health will come in the share of the population that is either employed or looking for work. The jobless rate has fallen a half percentage point since July, but some of this is due to workers' leaving the labor force, whether because they retired, went back to school or otherwise gave up the job hunt. The labor force participation rate fell to 63.5 percent in February, matching a three-decade low; a stabilization of this indicator could point to more healing in the labor market. SEQUESTER'S BITE It might be too soon to know if federal budget cuts in March are affecting employment in the broader economy. It could take time for the cuts to reverberate through industries that sell goods and services to the government. Many analysts think the budget "sequester" - as it is known in Washington - will bite harder later in the spring. Economists nonetheless think slow and steady job creation is adding momentum to consumer spending, which is the engine of the U.S. economy. "Improving job and income prospects are offsetting a sizeable portion of the fiscal drag," said Joseph LaVorgna, an economist at Deutsche Bank in New York. Average hourly earnings are expected to have risen 0.2 percent last month after increasing at the same rate in February. An increase in March would mark the fifth straight month of gains. The length of the average workweek is expected to have held steady at 34.5 hours. Since the 2007-09 recession ended, the economy has struggled to grow above a 2 percent annual pace. In the fourth quarter, output barely grew. But growth is widely seen rebounding in the first quarter before growing at around a 2.5 percent in the second half of the year. Without sequestration of government spending, the economy would likely be growing at a faster pace. In March, government payrolls are expected to have dropped by about 9,000 last month after falling 10,000 in February. (Reporting by Jason Lange; Editing by nSteve Orlofsky)

Analysis: Big Pharma down, not out, after Indian patent blow. Makers of patented drugs will in future have to get more creative about doing business in India, including striking deals with local firms to sell cheaper versions of their drugs, industry experts believe. The decision by India's Supreme Court on Monday not to allow a patent on Novartis AG's cancer drug Glivec angered but did not surprise U.S. and European drug companies, given past intellectual property (IP) setbacks. And it is unlikely to send them rushing for the exit. "India is too big to ignore," said Amit Backliwal, who heads South Asian operations for leading healthcare information provider IMS Health. "Companies will definitely get cautious, and it definitely means a change in their business model, but I don't think they will pull out." On paper, there is huge potential in India's rapidly growing $13 billion-a-year drugs market, which is driven these days by chronic diseases such as diabetes as well as infections. So far, though, it has failed to become a money-spinner for the world's top pharmaceutical companies, despite a new law in 2005 allowing drug patents for the first time. Innovative patented drugs make up no more than 5 percent of sales, according to IMS, and they have been under siege after a series of rulings allowing generics firms to over-ride patents for cancer drugs like Bayer AG's Nexavar. New Delhi has pulled no punches in its fight with Big Pharma, both by raising the bar for patents and being ready to issue so-called compulsory licenses that open the door for cheap generics when patented drugs are deemed unaffordable. In the face of such hurdles, some companies are already building new business models. Roche Holding, for example, plans to offer cut-price versions of two blockbuster cancer drugs Herceptin and MabThera under an alliance with Indian generics firm Emcure Pharmaceuticals. It is a scheme that Ajay Kumar Sharma, associate director of the pharmaceutical and biotech practice at business consultancy Frost & Sullivan, believes other drugmakers could now emulate. CALCULATED RISK India's stance on IP has long been a thorn in the side of Western business, prompting calls by Pfizer Inc and other U.S. firms last month for more pressure on the country to reform policies that can block U.S. exports. The argument cuts little ice in India, where officials see differential pricing - steep discounts for less well-off markets - as an obvious option for Western companies. "It is up to them to decide on India. Don't forget, India is a large market, a country of 1.2 billion," said Raghunath Mashelkar, former director general of the Council for Scientific and Industrial Research and an architect of India's IP policies. With differential pricing common in industries from autos to mobile phones, he argues pharmaceutical firms must find new ways to make products affordable for lower-income groups. "Drugmakers will have to work out strategies for the lower sections, to give affordable access to medicines and make money by large volumes and smaller margins," he told Reuters. "And then they will look at the middle and the upper sections and make money through smaller volumes but higher margins." It is a calculated risk, yet a number of drugmakers are already coming around to the view that trading volume for price is the way forward. One of those is GlaxoSmithKline Plc, which has a large footprint in India and has just invested $900 million to raise its stake in its consumer healthcare subsidiary. GSK's diversified approach to healthcare is shared by a number of rivals, including Novartis, that also have big interests in over-the-counter (OTC) remedies and branded generics, in addition to innovative medicines. It is this non-prescription sector that is set to dominate in India, driving double-digit percentage growth in a market that IMS has forecast will reach $24-34 billion by 2016, vaulting the country to eighth from 14th in the global league table. PricewaterhouseCoopers puts sales by 2020 at $49 billion. Much of the new business will still come from cheap generics made by local companies, but Western firms are also seeking to put their brands on unpatented medicines, prompting the likes of Abbott Laboratories and Daiichi Sankyo Co Ltd to buy up Indian companies. BETTER BETS ELSEWHERE With sales of patented drugs in Western countries slowing, emerging markets are a vital growth driver for drugmakers. India cannot be ignored, but there are clearly better bets elsewhere. "Emerging markets are growing at two to three times the rate of Western markets, but you've got to be in the right markets - you want to be in China and in Brazil," said Tim Race at Deutsche Bank. "India could be a really exciting market, given its increasing middle class, but the home-grown generics industry is extremely strong, and the patent situation is very difficult." India's patent stance also reverberates beyond its shores, since the country's generics firms export their cheap medicines across the developing world. So far, no other country has followed India with similar laws preventing the kind of secondary patent that stymied Glivec, though Michelle Childs, head of drug access policy at Medecins Sans Frontieres, said others were raising the patent bar in more subtle ways. Argentina, for example, recently issued guidelines to patent examiners urging stricter rules for granting new patents, and other countries have used compulsory licenses, she noted. "It's putting pressure on pharmaceutical companies to realise they can't continue to charge prices which are unaffordable to the majority of people," Childs said. (Additional reporting by Caroline Copley in Zurich; Editing by Will Waterman)

Like employment, demand for office space improves. At the same time, U.S. office construction during the first quarter reached a 14-year low as developers remain spooked by soft demand and meager rent growth, according to real estate research firm Reis Inc. Persistent lackluster U.S. job growth was behind the 0.1 percentage point U.S. office vacancy rate decline. Demand for office space hinges on hiring workers to fill it. Although hiring in February reached 236,000, that level has not yet been consistent enough to convince employers to commit to leasing more space. In areas where the growing technology and energy industries are dominant employers, rents are increasing much faster than the national average. The first-quarter vacancy rate stood at 17 percent compared with 17.1 percent in the fourth quarter, according to preliminary figures from Reis. The vacancy rate was down a scant 0.30 percentage point from the prior first quarter. "It's really in line with our expected trends, given that hiring hasn't accelerated," said Victor Calanog, Reis' vice president of research. "It's so indicative of weak demand in the office sector that quarterly construction figures are at a historic low and yet vacancies are not really cratering." Much of the vacancy decline can be attributed to a lack of new supply and not a strengthening of demand for space. In the first quarter, only 1.578 million square feet of new office space came online in the United States, fewer square feet than some Manhattan office buildings. It was the lowest quarterly amount of new completions since Reis began publishing quarterly data in 1999. Businesses occupied only 4 million more square feet in the first quarter, an increase equal to the prior quarter but more than 20 percent lower than the 5.3 million square feet the prior year. On an annual rate, the additional 4 million square feet absorbed in the first quarter would translate into one-third to one-fourth the rate traditionally leased up during a comparable time in a recovery period, Calanog said. Although the first-quarter's vacancy rate is well below the cyclical peak of 17.6 percent seen in the second half of 2010, it remains far above the 12.5 percent cyclical low in the third quarter of 2007 before the onset of the recession. Given high vacancy rates and lenders that are still skittish about committing relatively large amounts for construction and development financing, it is hard to justify breaking ground on new office projects, Reis said. Meanwhile, the national effective rental rate - which measures rents after subtracting months of free rent and other costs that landlords incur to attract tenants - grew at the glacial pace of 0.7 percent to $23.15 per square foot during the first quarter. Before those costs, asking rent also grew by only 0.7 percentage to $28.66 per square foot. That was a slowdown from the 0.8 percent pace in the fourth quarter but still greater than the quarterly average of about 0.4 percent increase seen since rents began rising consistently in the fourth quarter of 2010. Reis tracks 79 U.S. office markets. The U.S. effective rent is still about 7.7 percent below the peak level in the second quarter of 2008, right before the collapse of Lehman Brothers sparked a financial meltdown. Still, the U.S. property market is really a collective of vastly different local markets. Property markets that have strong energy or technology sectors have fared vastly better than the nation as a whole. San Francisco, New York, Houston, and San Jose, California, all saw effective rent growth rise more than a full percentage point. Effective rent in San Francisco rose 1.7 percent to $35.60 per square foot annually, while New York's rose 1.6 percent to $49.63 per square foot. Houston was No. 3, with rent up 1.5 percent to $21.22 per square foot, and San Jose was up 1.1 percent at $24.65 per square foot. Phoenix, Las Vegas, Detroit and Dayton, Ohio, had vacancy rates of at least 26 percent, Reis said. At 9.5 percent, Washington D.C. had the lowest vacancy rate in the first quarter. Reis does not expect that to continue. "We're looking at rising vacancies at least over the next couple of years," Calanog said, adding that the surrounding office markets also will feel the brunt of U.S. budgetary cuts. (Editing by Matthew Lewis )

Exclusive: Thermo emerges as frontrunner for Life Tech -sources. Thermo Fisher, the world's largest maker of laboratory equipment, is considering a bid of $65 to $70 per share for Life Tech and is interested in buying the entire company, two of the people said. It can squeeze more cost savings than buyout firms can and is expected to have a leg up on private equity bidders, which do not believe they can still achieve desired returns at that price range, the three people said. Thermo also has an advantage over rival trade buyers, which may not want all of Life Tech or have not been as aggressive in their pursuit of the company so far, the sources said. Bids are due next week and it is still too early to tell the outcome of the auction, all three sources said, asking not to be named because the matter is confidential. Shares of Life Tech rose 1.8 percent to close at $65.75 on Tuesday, giving the company a market value of $11.2 billion. Thermo Fisher, whose shares rose 4 percent to $78.56, had a market cap of roughly $28 billion. Carlsbad, California-based Life Tech, which has hired advisers to explore a sale, has also attracted interest from Danaher Corp ( DHR.N ), Roche Holdings AG ( ROG.VX ) and private equity firms, people familiar with the matter told Reuters previously. A buyout consortium of Blackstone Group LP ( BX.N ), Carlyle Group LP ( CG.O ) and Singapore's state investor, Temasek Holdings, remains in the process, but it is not expected to outbid Thermo, several people familiar with the matter said this week. They said KKR & Co LP ( KKR.N ) briefly teamed up with Hellman & Friedman LLC to pursue a deal but is not expected to bid anymore. The position of Hellman & Friedman in the deal could not be learned. Life Tech, Thermo Fisher, Roche, KKR, Blackstone and Carlyle declined to comment, while Danaher and Hellman & Friedman did not respond to requests for comment. DEAL SEEN BOOSTING EARNINGS If Thermo Fisher wins the auction, it would boost its presence in scientific research, genetic analysis and applied sciences and make it a major player in the genetic sequencing market. It would also create a healthcare technology giant with annual revenues of over $16 billion and some 50,000 employees. But depending on the final price, a deal could also stretch it financially. At a range of $65 to $70 per share for Life Tech, Thermo Fisher believes the deal would add to its earnings, two of the people said. Life Tech, however, may seek more than $70 per share, based on the view that potential synergies Thermo would be able to extract would make a deal accretive even at that price, the third source said. Shares of Life Tech, which makes genetic testing equipment and products used in biotechnology development, have run up in expectation of a deal. They are trading at around $65, up 32 percent year to date, outperforming a 9.5 percent rise in the Standard & Poor's 500 Index .INX over the same period. Thermo shares have risen more than 18 percent. Life Tech is already trading in line with its peers, at about 9 times its earnings before interest, tax, depreciation and amortization (EBITDA). Meanwhile, with its net debt equivalent to 2.4 times its EBITDA, Thermo Fisher's leverage is higher than the median of its peers, 1.6 times, according to Thomson Reuters data. This could inform Thermo Fisher's decision on whether to fund its bid just with cash or also issue new equity. Life Tech said on January 18 it had hired Deutsche Bank ( DBKGn.DE ) and Moelis & Co to assist in its "annual strategic review," opening the door to a possible sale. (Reporting by Greg Roumeliotis, Soyoung Kim and Paritosh Bansal in New York; Editing by Bernard Orr , Steve Orlofsky and Richard Chang )

DISH Network announces debt offering. It will offer about $1.0 billion of its senior notes, subject to market and other conditions, the company said in a statement on Tuesday. DISH has been looking to diversify beyond its core pay-TV business, which has matured and faces tough competition from cable, telecom and Internet video providers. In January, DISH put in a bid of $3.30 per share for Clearwire, which had already agreed to sell itself to majority owner Sprint Nextel for $2.97 per share. Clearwire has said that it would continue talks with Dish but that it has not changed its recommendation in favor of its agreement with No. 3 U.S. mobile provider Sprint. Clearwire, Chairman Charlie Ergen has told investors he has "plenty of time" to work out a wireless strategy, the company also noted that it hopes to run wireless technology tests by the end of this year. Ergen has acquired about $3 billion worth of wireless spectrum over the last few years. (Reporting By Nicola Leske ; Editing by Chizu Nomiyama )

BoE says deposits transferred to Bank of Cyprus. The BoE's Prudential Regulation Authority (PRA)said the money will be covered under Britain's compensation scheme which protects deposits up to 85,000 pounds. "The agreement does not affect access to bank accounts and therefore all customers who had an account with Laiki Bank UK will be able to access funds as normal and do not need to do anything," the PRA said in a statement. A BoE spokeswoman said the switch follows a decree issued by the central bank of Cyprus and that the deposits in Laiki are being transferred in full, meaning there are no deductions. Under an international bail agreement for Cyprus, Cyprus Popular Bank, parent of Laiki, is being wound down. Depositors with savings of more than 85,000 pounds or 100,000 euros at Cyprus Popular Bank and Bank of Cyprus in Cyprus itself will lose at least 30 to 40 percent to help pay for the bail out. Laiki Bank UK is a branch, meaning Britain was not obliged to protect its depositors, unlike with Bank of Cyprus UK, which is a subsidiary and therefore its deposits up to 85,000 pounds are protected. Laiki UK said some 15,000 accounts with total balances of about 270 million pounds have been transferred. "In consideration for Bank of Cyprus UK Limited assuming liability for these deposits it has received an equivalent amount in cash from Laiki," Laiki said in a statement. "Furthermore to ensure continuity of service during transition, holders of transferred deposits can continue to use the branch services of the Laiki UK branch," Laiki said. (Reporting by Huw Jones , editing by Sinead Cruise)

Goldman Sachs beats rivals as capital markets rally in first quarter. The Wall Street heavyweight ranked number one for initial public offerings (IPOs) and common stock sales during the first three months of 2013, raising $24.1 billion in proceeds from 89 issues, according to Thomson Reuters data. Goldman's share of the market was 12.8 percent after rising 4.1 percentage points in the first quarter. Overall equity capital markets activity totaled $187.5 billion during the first quarter, up 21 percent on the same period in 2012 and the strongest annual start for global equity capital markets issuance in two years, the data showed. JP Morgan ( JPM.N ) took top spot in the table for debt capital markets, thanks in part to high volumes of global investment grade and high yield corporate debt underwriting. The bank booked $126.7 billion of business in the first quarter, increasing its share of the market by 0.7 percentage points to 8.3 percent. Overall debt capital markets activity dropped 14 percent to $1.5 trillion in the slowest first quarter for debt market activity since 2008. The value of worldwide M&A deals rose 10 percent to $542.8 billion in the first quarter, as a 63 percent rise in big-ticket deals valued $5 billion and higher offset a 16 percent drop in the number of new deals announced. Goldman increased its share of the market for new takeover activity by 1.3 percentage points to 25 percent. Morgan Stanley ( M.N ) was ranked number one for deals completed. (Reporting by Sinead Cruise ; Editing by David Cowell)

Housing recovery boosts pickup, SUV sales in March. In March, new light-vehicle sales rose 3.4 percent and the annual sales pace reached 15.27 million, in line with analyst expectations. This marked the fifth straight month the industry sales rate topped 15 million. General Motors Co ( GM.N ) said the stronger housing market helped its sales to small businesses rise nearly a third. Ford Motor Co ( F.N ), the No. 2 U.S. automaker, posted a 16.3 percent rise in sales of its F-Series pickup trucks. "The housing sector recovery is in full swing," Ford senior U.S. economist Jenny Lin told reporters and analysts. The U.S. housing sector is starting to contribute to growth after years of dragging down the broader economy. Rising home values are helping U.S. consumers feel more confident about buying a new vehicle, GM and Ford executives said. Home prices in 20 metropolitan areas rose 8.1 percent in January from a year earlier, the biggest 12-month rise since June 2006. Meanwhile, U.S. home builders are breaking ground on more new houses this year, boosting truck sales. In about a month, GM will launch redesigned Chevrolet Silverado and GMC Sierra big pickups as 2014 models. Ford is planning an overhaul of its F-150 next year. Pent-up demand and a wider range of financing options have also helped boost sales, executives said. The average age of vehicles on U.S. roads is more than 11 years, an all-time high, and many consumers can no longer put off buying a replacement. "You're not only having better traffic level, you're also having better success with so many people who got hit on their credit scores during the recession," Al Castignetti, U.S. sales chief for the Nissan ( 7201.T ) brand, said in an interview. "That's opening up a whole new segment that was kind of locked out of the auto industry the last couple of years." (For a graphic on U.S. auto sales, click on link.reuters.com/was58s . For a series of graphics on the U.S. housing market, click on r.reuters.com/pum86s ) A 'TRICKY' RECOVERY Auto sales each month are an early indicator of economic health. The auto industry is in the midst of its fourth year of recovery from an economic downturn that pushed GM and Chrysler into bankruptcy in 2009. GM sold 245,950 vehicles in March, up 6.4 percent from a year earlier but falling short of at least three estimates. Ford sales rose 5.7 percent to a stronger-than-anticipated 236,160 vehicles, making March its best month since May 2007. GM also posted a 31 percent sales gain in crossovers vehicles, such as the Chevrolet Traverse. Ford posted a 15.4 percent spike in sales of SUVs, such as the Escape. Toyota Motor Corp ( 7203.T ) posted a 1 percent rise in U.S. sales to 205,342 vehicles. Chrysler Group LLC ( FIA.MI ), the third-largest U.S. automaker, rose 5 percent to 171,606, its best month since December 2007. "If I had to sum up the month in one word, it would be 'Wow'," Toyota's head of U.S. auto operations Bob Carter said. In a surprise development, the Nissan Altima eked past the Toyota Camry to be the best-selling U.S. mid-size sedan in March. The difference between the two models was exactly 100 cars. Carter acknowledged that Toyota has not redesigned the Camry as recently as other rivals. But he said the Camry remains on track to be the top-selling car in this bread-and-butter segment for the thirteenth straight year. The U.S. auto market is among the strongest in the world and is increasingly critical for major automakers as car sales in European tumble. Sales in Spain, for example, fell 13.9 percent in March, figures released on Tuesday showed. GM stuck to its forecast for U.S. industry sales as high as 15.5 million this year, which would be the best year since 2007, before the U.S. economy slid into recession. The industry's swift recovery over the last few years has allowed the sector to be a bright spot during an uncertain economic recovery. But TrueCar.com analyst Jesse Toprak said those outsized gains would be difficult to maintain. "After this year, it's going to become a bit tricky," he said. "Getting to 15.5 (million) is not going to be as tough as getting to 16.5 (million). Getting there may take another couple of years." (Additional reporting by Paul Lienert in Detroit; editing by John Wallace)

Fannie Mae posts record $7.6 billion quarterly profit. The U.S.-controlled company said it expects to be profitable in the future. Profits would allow it to record gains on billions of dollars worth of assets it had written down. That would help Fannie Mae repay roughly $117 billion it owes the U.S. Treasury for a taxpayer rescue during the financial crisis. But Fannie Mae executives told reporters on a conference call that the company concluded it could not be sure enough of the timing of future profits to record that gain. If Fannie Mae had taken the gain, it would have reduced the company's eligibility to borrow cheaply from the Treasury. This could have forced the company to pay more to borrow in the market. "It was more of a defensive decision aimed at maintaining potential funding rather than a regulatory concern about future earnings," said Isaac Boltansky, a policy analyst at Compass Point Research & Trading. Fannie Mae's regulator, the Federal Housing Finance Agency, approved this decision, and Fannie Mae said in a filing that it expects to start taking those tax-related gains as early as the first quarter of 2013. The future of Fannie Mae and its smaller rival Freddie Mac is in question as lawmakers try to figure out the best way to minimize taxpayer exposure to mortgage funding without pressuring the housing market. The U.S. government seized the two housing financiers in 2008 during the housing market crash and financial crisis as losses mounted on soured loans. Fannie Mae missed its March 18 filing deadline for its fourth-quarter financial results and said it needed more time to analyze its deferred tax assets which are essentially prepaid taxes whose benefit can be realized in the future. When companies are unsure about their ability to earn enough profit in a short enough time frame, they essentially write down deferred tax asset through recording a "valuation allowance." If earnings are later expected to be high enough, the valuation allowance can be reversed, resulting in big one-time gains. Fannie Mae was trying to decide whether it would earn enough money soon enough to merit reversing the valuation allowance. "This is a thorny accounting situation for management and those making accounting decisions," said Jim Vogel, head of interest rate strategy at FTN Financial in Memphis, Tennessee. Accounting concerns have dogged Fannie Mae for years. In 2006, a report from its then-regulator found the company had consistently used aggressive accounting to defer income and expenses, resulting in steady profit growth, and high bonuses for company executives. On Tuesday, Fannie Mae reported that its fourth-quarter earnings helped it rack up $17.2 billion of profit in 2012, its first year in the black since 2006. As the housing market has stabilized, Fannie Mae and Freddie Mac ( FMCC.OB ) have begun recording profits again. U.S. home prices in January were 8.1 percent higher than a year earlier and mortgage delinquencies in the fourth quarter fell to their lowest level since 2008. Fannie Mae Chief Executive Officer Timothy Mayopoulos said in a conference call with reporters that "2012 really marked a turning point for us." Earlier this year the U.S. government eased some of the terms of the bailout for Fannie Mae and Freddie Mac. The easier terms allow the companies to give most of their profits to the government. Previously, the companies had to pay dividends to the government even if they were not profitable which forced them to draw down on lines of credit to meet these obligations. BIGGER QUESTIONS LOOM Fannie Mae and Freddie Mac buy and guarantee home loans that meet their standards and package them into bonds. The companies own or guarantee $5.2 trillion in mortgages, and along with the Federal Housing Administration are backing 9 out of every 10 U.S. mortgage loans now. Congress and the White House have made little progress in advancing legislation to determine the future of the two mortgage companies, though both Republicans and Democrats say they should be wound down. "I don't think that policymakers should look at our return to profitability as a reason not to address what the structure of the future of housing finance should be," said Fannie Mae's Mayopoulos. Republican Senator Bob Corker reiterated his call that so-called government sponsored enterprises (GSE) profits not become an excuse for congressional inaction and said there is a need for long-term reform of the U.S. housing finance system. "I'm glad Fannie Mae is showing an increase in income, but we have to remember that this is largely because we have crowded out private capital and made Fannie or Freddie the only viable execution option for new loans," he said in a statement. Corker was among a bipartisan group of U.S. senators that introduced a bill last month to prevent the government from using fees collected by Fannie Mae and Freddie Mac to pay for other government programs. Since the announcement of Fannie Mae's record earnings earlier on Tuesday, the risk premiums, or spreads, of both Fannie Mae's and Freddie Mac's bonds over comparable Treasuries narrowed 0.02 percentage points from Monday's close. Five-year Fannie Mae debt was yielding 10 basis points above comparable Treasuries. "This says the housing market is doing well. Their losses on their foreclosed homes are falling, but the rate is still quite high. Rising home prices and falling delinquencies have improved Fannie's profitability," said Mary Beth Fisher, head of U.S. interest-rate strategy at SG Corporate & Investment Banking in New York. For the first time since house prices started slumping in the summer of 2006, a closely watched barometer for housing prices showed that all of the 20 major cities tracked by the S&P/Case Shiller Home Price Index rose on a year-over-year basis in January. (Reporting by Margaret Chadbourn in Washington and Richard Leong in New York; editing by Dan Wilchins , Clive McKeef and David Gregorio )

Bank of Cyprus, Popular Bank shares suspended until Apr 15. Administrators have been appointed for Popular, which will be split into a "good" and a "bad" bank, with its good assets taken by Bank of Cyprus under terms of a bailout deal with international lenders. In addition, Bank of Cyprus' major depositors will see 37.5 percent of their uninsured deposits converted to equity. (Reporting by Michele Kambas ; Editing by Mark Potter )

S&P pushes to move state cases to federal court. Connecticut Attorney General George Jepsen is leading a coalition of attorneys general that brought state cases against the McGraw Hill Cos Inc MHP.N unit in February. Those cases were announced the same day that the Justice Department said it was seeking $5 billion in its own civil lawsuit against S&P. The rating agency wants to move the lawsuits by 16 U.S. states and Washington, D.C., to the federal level, hoping to limit liabilities as it defends itself against accusations of inflating credit ratings to try to win fees from clients. The government argued last week against moving the cases. However, S&P parent McGraw-Hill said on Tuesday that the government not only failed to disclose its own interest in the state cases last week, but that the various state cases turn on federal rules and regulations, including Securities and Exchange Commission rules. The company also argued that moving the cases to one court would help avoid a "patchwork of potentially overlapping and inconsistent injunctions." Legal experts said earlier that S&P might struggle to move the state cases, given recent similar cases. The lawsuits allege that S&P misled investors into believing its ratings were objective and not tainted by conflicts of interest. The ratings were mainly for complex fixed income products that imploded in the financial crisis. Moody's Corp ( MCO.N ) unit Moody's Investors Service and Fimalac SA's ( LBCP.PA ) Fitch Ratings - S&P's main rivals - were not hit with similar federal lawsuits. McGraw-Hill shares lost more than a quarter of their value during the week the suits were announced. They closed on Monday at $51.55 a share and were at $51.85 in midday trading. (Reporting by Luciana Lopez. Editing by Andre Grenon)

Laiki UK depositors won't pay Cyprus bailout levy. The move was overseen by Britain's new financial regulator, the Bank of England's Prudential Regulatory Authority, on its first official day of operation. Laiki UK's 15,000 deposit accounts will be transferred to Bank of Cyprus UK and will not be subject to a levy or "haircut" or other restrictions placed on banks in Cyprus, Bank of Cyprus said in a statement. Laiki Bank UK is a branch, meaning Britain was not obliged to protect its depositors, unlike Bank of Cyprus UK, which as a subsidiary is regulated in Britain and has more autonomy from the parent group. This means savings below 85,000 pounds ($129,500) are covered by Britain's compensation scheme if a bank runs into trouble. Bank of Cyprus said it has received an equivalent amount in cash from Laiki to cover the liability for the deposits. Britain was keen to clarify protection for savers in Cypriot banks to avoid a repeat of a 2008 row with Iceland when Landsbanki collapsed. Britain paid out billions of pounds to UK savers, which is being repaid by Iceland. Britain's compensation scheme protection of up to 85,000 pounds is equivalent to the 100,000 euro ($128,500) guarantee in Cyprus and across the EU. The Laiki UK customers have an average of 18,000 euros in their deposit accounts. The PRA said all Laiki Bank UK customers will be able to access funds as normal. All of Laiki Bank UK's loans, including mortgages, credit cards and overdrawn accounts, will be transferred to Bank of Cyprus Public Co. Ltd, the parent group in Cyprus. The BoE said the switch follows a decree issued by the central bank of Cyprus and the deposits in Laiki are being transferred in full, meaning there are no deductions. Under an international bailout agreement for Cyprus, Cyprus Popular Bank, parent of Laiki, is being wound down. Depositors with savings of more than 100,000 euros at Cyprus Popular Bank and Bank of Cyprus held at Cypriot branches will lose at least 30 to 40 percent to help pay for the bailout. ($1 = 0.6565 British pounds) ($1 = 0.7784 euros) (Reporting by Huw Jones , additional reporting by Steve Slater; Editing by Ruth Pitchford)

Carrefour eyes plan for Brazil, China growth: FT. The company's rate of growth in those markets is "probably insufficient", the newspaper quoted CEO Georges Plassat as saying in its Tuesday edition. "We are working on a strategy," Plassat was quoted as saying. "These are big countries, and there are lots of possibilities but I hope the plan will be ready by the beginning of next year." Carrefour has raised around $3.6 billion by selling units in Indonesia, Colombia and Malaysia as part of its strategy of raising cash to defend positions in western Europe, China and Brazil. In Turkey, meanwhile, Carrefour is talking to joint venture partner Sabanci ( SAHOL.IS ) about options for its business there that could include combining with Migros, a retailer controlled by private equity group BC Partners, the newspaper said. Plassat said it was probable the situation would be clarified in several weeks, according to the paper. Carrefour had said it was reviewing the future of the joint venture after Sabanci said a year ago it was unhappy with Carrefour's performance. (Reporting by James Regan ; Editing by Louise Heavens)

ECB's Coeure warns against consequences of currency war. Coeure, a European Central Bank Executive Board member, spoke shortly before the first policy-setting meeting of the new Bank of Japan's Governor, Haruhiko Kuroda, who wants to achieve the BOJ's inflation target in two years by taking aggressive monetary policy both in terms of the volume and type of assets it purchases. In the text of a speech prepared for a conference on currency wars, Coeure said that especially since central banks in advanced countries are close to reaching the limits of their conventional policies, it would be a matter of concern if countries were to directly pursue overt competitive devaluations, particularly by resorting to large purchases of foreign assets. Japan's expansive policies, pushed by Prime Minister Shinzo Abe, which aim to put an end to nearly two decades of grinding deflation, have driven down the yen and triggered a debate about competitive devaluation earlier this year. A firm statement by the Group of 20 countries in February saying there would be no currency war - essentially countries competing to weaken their currencies - eased worst fears of such an event. "As much as exchange rate movements are the natural result of policies aimed at achieving sound and legitimate domestic targets, such as price stability, and as long as other central banks are not constrained in their ability to take offsetting actions, there is no reason for concern," Coeure said. "Keeping one's own house in order, however, is quite different from sticking one's head in the sand. Especially in the current conjuncture, the room for policy actions might be reduced, or countervailing interventions might have become more costly," he said. Then, he added, large and sustained currency swings might hinder the achievement of domestic targets. He stressed that the exchange rate was not a policy target for the ECB, but it mattered for price stability and growth. "If contrary to the objective of medium term price stability, it may thus trigger offsetting policy actions," he said. (Reporting by Anna Yukhananov in Washington, writing by Eva Kuehnen and Sakari Suoninen in Frankfurt)

Exxon, BHP plan world's largest floating LNG plant off Australia. At around half a kilometer (0.3 miles) long, the vessel would be nearly as long as five football fields laid end-to-end and would be the largest floating facility in the world. The plant would bump up Australia's current LNG production by nearly 30 percent, producing 6 million to 7 million metric tons (6.62 million to 7.71 million tons) per annum (mtpa), enough to fuel the LNG needs of Japan, the world's largest importer of the gas, for about a month. Exxon and BHP's decision to develop the Scarborough field using floating LNG is another vote of confidence in the as yet untried technology, which energy companies hope will help cut down on the ballooning costs of developing gas. Exxon, which detailed the plan in a filing with Australia's environment department on Tuesday, did not give a cost estimate for the plant. Australia currently has $190 billion worth of LNG projects under way and is on track to replace Qatar as the world's largest LNG exporter by the end of the decade. But the country has been plagued by cost inflation, and of seven LNG plants under construction there that are due to come online in 2014 or later, four have already announced cost blowouts ranging from 15 to 40 percent. FITCH BEARISH High costs and competition from other LNG producing regions such as North America and East Africa have led some industry analysts to predict that Australia's growth potential as an LNG producer is increasingly limited. Fitch Ratings was the latest to forecast lower growth for the Australian LNG sector, saying in a report on Tuesday that increased costs had eroded the country's competitive advantage. Royal Dutch Shell ( RDSa.L ), considered the industry leader in floating LNG, has touted floating technology as a way to circumvent Australia's rising costs and cut down on construction time. "Floating (LNG) is actually very good for the federal government in terms of getting the tax revenues out faster and quicker," Ann Pickard, Shell's country chairman in Australia, said earlier this year. An added advantage of floating LNG vessels is that they can be redeployed to another location once a gas field is depleted. The Scarborough LNG plant would start production in 2020-2021 and be moored 220 kilometers (137 miles) from the Australian coast, Exxon said in the government filing. If the Scarborough gas field were developed using floating LNG, the plant would be about double the capacity of Shell's Prelude LNG, also off the cost of Australia, which will have a capacity of 3.6 mtpa when it comes online in 2017 and be the world's first floating LNG plant. Shell indicated that its Prelude LNG project was expected to cost in the range of $10.8 to $12.6 billion. With a similar cost structure, Scarborough LNG would cost $18 billion to $24.5 billion, according to Reuters' calculations. The Scarborough floating LNG plant would be built offshore, likely in South Korea, which is already in talks to build similar facilities. Exxon and BHP, which are 50-50 joint venture partners in the Scarborough development, expect to make a final investment decision on the plant in 2014-2015, Exxon said. (Editing by Muralikumar Anantharaman)

A fiscal warning from two former budget chiefs. David Stockman, who was Republican Ronald Reagan's budget director from 1981 to 1985 and a key architect of tax-cutting policies, and Peter Orszag, budget director for Democratic President Barack Obama from January 2009 until July 2010, agreed the United States spends more on defense than is needed. Both also said the country would be well-served if better-off citizens paid more taxes and took smaller benefits from the government in their old age. But the two men, who appeared together at a Thomson Reuters Newsmaker event, were at odds over how quickly and forcefully the government should act to reduce the deficit. Stockman contends the government should dramatically cut spending and raise taxes to pay down the national debt. Orszag says governments are right to use spending to stretch out the economic adjustments to keep large segments of population from losing their jobs, which itself can cause long-lasting problems. The men spoke on the eve of the formal publication of Stockman's new book, "The Great Deformation: The Corruption of Capitalism in America." Stockman calls his book, which runs more than 700 pages, a screed. He says he wrote it to call attention to damage caused over 80 years by crony capitalists, spendthrift politicians and central bankers at the Federal Reserve who have inflated financial bubbles by printing money. Stockman criticizes politicians of both parties, starting with Democrat Franklin Roosevelt in the 1930s and including his former boss Reagan, as well as former Republican President George W. Bush. Stockman advises investors to sell their securities and hold cash instead. He admits he does not believe Washington will adopt his recommendations. Stockman said in an interview, before taking the stage with Orszag, that with his approach "there would be a lot of pain," with job losses and reduced income, perhaps for a generation. He said that would be better than further putting off the day of reckoning with the deficit. Orszag told the audience, "David wants us to flog ourselves to have some brighter future and the problem is that the flogging can do some serious damage to that future." Orszag said Stockman is wrong to place so much blame for the weak economy and budget deficit on government policies. Changes from new technology and global trade have hurt incomes and employment, he said. Some $85 billion of across-the-board government spending cuts automatically took effect on March 1 after Congress and the White House failed to agree on federal budget decisions. The drain of money has put pressure on the U.S. Federal Reserve to keep interest rates low to shore-up the economy. Washington is having recurring fiscal showdowns over how to slash the budget deficit and $16 trillion of national debt, which was built from years of spending on wars in Iraq and Afghanistan and stimulation for the U.S. economy. In Stockman's book, he draws on his experience in government and his mixed-success as a Wall Street executive to make his points. Stockman, 66, became widely known in 1981 for criticizing the institutions where he worked. He talked freely then to a magazine writer for The Atlantic, which published his misgivings about the Reagan administration's spending policies. Orszag, 44, is now a non-executive vice chairman of corporate and investment banking at Citigroup Inc. He was director of the Congressional Budget Office before working for Obama. He was also a White House economist in the administration of former President Bill Clinton. (Reporting by David Henry in New York; Editing by Lisa Shumaker )

UBS's Burnett joins mate Dowie for Asia StanChart role. The hiring of Burnett, the Asia chairman of global capital markets at UBS, comes less than two years after Standard Chartered hired Mark Dowie. Dowie is Standard Chartered's global head of corporate finance and a former UBS vice chairman of investment banking. Burnett and Dowie worked together at UBS in Hong Kong as co-investment banking heads for Asia between 2000 and 2004. Dowie later became vice chairman of investment banking at the Swiss bank, leaving for London in 2004. "I am greatly looking forward to working with Mark again, especially in building on our past successes," Burnett told Reuters in an email. Dowie, a former British naval officer, left UBS that same year to start his own boat repair and sales company. Burnett moved on to another senior role at UBS in the Middle East in 2006. Shortly after selling the marine business, Dowie re-entered banking, joining Standard Chartered in August 2011. Burnett's hiring comes as Dowie aims to build the bank's M&A advisory and ECM businesses. Standard Chartered's corporate finance business model differs from traditional investment banks that rely on more heavily on equity capital market underwriting and mergers and acquisitions advisory to earn the majority of its revenues. The London-based bank, which does more than 80 percent of its business in emerging markets such as Asia, leans more on its core lending franchise. Standard Chartered's corporate finance's operating income is $2.22 billion, 40 percent of which comes from lending activities around structured trade finance, leasing finance, asset-based financing. Burnett will start on April 8 and remain based in Hong Kong, Standard Chartered said. (Editing by Ryan Woo)

Only Cypriot president, parliament speaker can fly business class: MoU. The ban on business class travel for government employees will not apply to transatlantic flights, said a memorandum of understanding between Cyprus and the euro zone, under which the Mediterranean island is to get 10 billion euros in loans. Apart from the restrictions on more comfortable travel, senior government officials will also lose the right to buy duty-free cars and all state officials and parliamentarians will have wages frozen until 2016, the document said. (Reporting By Jan Strupczewski ; Editing by Adrian Croft )

BofA hires ex-Morgan Stanley exec as head of cap intro in Asia Pacific. Bank of America's spokesman Mark Tsang confirmed the contents of the memo. Abraham, who will relocate from Dubai to Hong Kong, will help the bank's hedge fund clients raise capital from investors, a role mainly known as capital introduction in the industry. He will report to Graham Seaton, the head of the bank's prime brokerage unit in Asia Pacific. Prime brokers provide services such as clearing trades and lending money to hedge funds. Abraham was most recently head of Middle East and North Africa prime brokerage at Morgan Stanley, according to the memo sent by Richard Boseley, head of Asia Pacific equities sales and global markets financing & futures, and Seaton. Before that, he spent six years at Goldman Sachs in London, the memo added. (Reporting by Nishant Kumar ; Editing by Mark Potter )

U.S. pipeline agency issues corrective action order to Exxon. The Pipeline and Hazardous Materials Safety Administration (PHMSA) said Exxon must test the Pegasus pipeline and submit a remedial work plan before it can resume operations. The pipeline leak, which occurred on Friday, has reignited the debate over the proposed Keystone XL pipeline, which would link Canada's oil sands region to refineries on the U.S. Gulf Coast. (Reporting by Timothy Gardner and Andy Sullivan ; Editing by Ros Krasny and Steve Orlofsky)

Sorry Apple gets respect in China after tabloid trial. After coming under near-daily media assault for the past two weeks and facing the threat of penalties from two Chinese government bureaus, Apple apologized to Chinese consumers on Monday for poor communication over its warranty policy and said it will change the terms for some of its iPhones sold in China. Greater China is Apple's second-biggest and fastest-growing market, with sales up almost 40 percent to $6.8 billion in the final quarter of 2012. The Chinese newspapers that threw brickbats at Apple a few days ago have since changed their tune. "The company's apology letter has eased the situation, softening the tense relationship between Apple and the Chinese market ... Its reaction is worth respect compared with other American companies," wrote popular tabloid the Global Times, published by Communist Party mouthpiece the People's Daily. The Foreign Ministry praised Apple for "conscientiously" responding to consumers' demands. "We approve of what Apple said," spokesman Hong Lei told a daily news briefing on Tuesday. Only last week, the People's Daily issued a scathing editorial on Apple's return policy saying the popular smartphone maker was filled with "unparalleled arrogance". Apple was first targeted in mid-March by state broadcaster CCTV during its annual consumer day segment. Volkswagen AG, which was also criticized on the same show, plans to recall vehicles to fix a gearbox problem. "That Timothy Cook had to step up and respond from the CEO's chair shows the importance of China and how critical it is as a market not just for Apple but for every multinational company here," said Kent Kedl, Shanghai-based head of Greater China and North Asia for risk consultancy firm Control Risks. Foreign companies who are adept at managing media crises at home find it much tougher to navigate China where state media outlets, pandering to different audiences, often have opaque agendas and intentions. Analysts also said that foreign companies need to remember that the bigger the brand, the bigger a target it will be, especially in China. "What foreign companies need to pay attention to, is that nobody operates in a vacuum, nobody operates only on the good graces of a brand name ... Five to ten years ago a report on CCTV would have rippled a little bit, now it goes viral and has a life of its own," Kedl said. NOT APPLE'S FIGHT TO WIN Apple's acquiescence in this setting, where the world's largest technology company by market value was ironically the David going up against China's Goliath state media machinations, shows its wisdom in not challenging a more powerful enemy. Although popular opinion on the Internet swayed in Apple's favor, against state media and the reported threats of penalties from China's State Administration for Industry and Commerce as well as its quality and inspection bureau, it was not Apple's fight to win, experts said. Other foreign companies targeted by CCTV, such as fast food chain operator Yum Brands Inc, have also apologized and faced scrutiny from government agencies. Last December CCTV reported that two of Yum's suppliers purchased chickens from farmers who used excessive levels of antibiotics in their animals. The report and subsequent investigations hurt sales at Yum's KFC chain. But Apple's situation is somewhat different because CCTV's claim was not completely new. Last July, a Chinese consumer rights group also slammed Apple for its after-sales policies. That time, however, Apple held its ground. With the apology and warranty change, Apple's mea culpa is significant not just because it comes from a tech firm that rarely apologizes, but also because Apple may be realizing that in China, it needs to be proactive. "They're out of the woods and into the weeds. Things will rarely be smooth for Apple in China - even if consumers love it there will always be factions in and out of government that are trying to take it down," said Michael Clendenin, managing director of technology consultancy RedTech Advisors. "Apple made it easy this time, but they have learned to be more proactive. The next time they stumble, it will be easier to recover," he said. (Additional reporting by Ben Blanchard in BEIJING; Editing by Emily Kaiser )

Verizon denies intention to merge with or buy Vodafone. However, the telephone company said on Tuesday that it would still be a willing buyer of Vodafone's 45 percent share of their Verizon Wireless U.S. venture, in line with public statements Verizon has made many times over the years. Verizon's statement contradicts a report from the Financial Times Alphaville blog on Tuesday that cited unnamed sources saying Verizon and its biggest U.S. rival, AT&T Inc ( T.N ), had been working together on a bid for Vodafone in which Verizon would take Vodafone's U.S. assets and AT&T would take the rest. Bernstein analyst Robin Bienenstock said in a research note that any deal "other than a merger is unwelcome by Vodafone's management" as management believes that the U.S. market is more attractive than Europe for wireless. While analysts said they saw benefits from a Verizon purchase of the rest of its wireless venture, they were much more skeptical of the idea that AT&T would want Vodafone's overseas assets in a deal they perceived as highly risky. Verizon has said for many years that it would like to buy the rest of Verizon Wireless, the biggest U.S. mobile service, but the companies have never been able to reach an agreement. Speculation about a potential deal between Verizon and Vodafone has ramped up since January as Vodafone explored what to do with its U.S. asset, which makes up about 75 percent of its value. Speculation about a potential deal between Verizon and Vodafone has ramped up since January as Vodafone explored what to do with the U.S. business, considered by many investors its most valuable asset. The speculation has stemmed partly from a valuation gap between Verizon and Vodafone, seen by some analysts as making a deal this year more likely. Verizon's unwillingness to go ahead with a merger may scupper its chances of buying out Vodafone's Verizon Wireless stake, at least for now, according to some analysts. Verizon shares closed 0.6 percent higher at $49.50 on Tuesday, while Vodafone shares closed up 2.9 percent at 192 pence in London. (Reporting by Sinead Carew in New York; editing by Matthew Lewis )

Elior buyout could prompt more aggressive loan terms. Covenant-lite financings have been a staple feature of the US market since 2005, peaking at $47.9 billion in the second quarter of 2007 and raising $42.5 billion in the fourth quarter of 2012. Despite large volumes in the US, covenant-lite deals have in the main been shunned by the more conservative European loan market, as bankers and investors have clung to a vast array of financial and maintenance protections. With the emergence of a greater number of cross-border transactions, covenant-lite hit Europe through euro carve-outs of large dollar financings. Recent examples include French telecoms equipment maker Alcatel-Lucent ( ALUA.PA ), UK-based engineering firm Doncasters DONCA.UL, call center company Genesys ( GENS.NS ), Belgian chemicals company Taminco TAMGO.UL and insulation manufacturer Unifrax AMSCPF.UL. Sponsors prefer debt without covenants and could turn to the bond market, which has no financial covenants and few maintenance covenants, providing a real threat to loan investors eager to do deals and prevent the departure of well-liked credits from the asset class. The leveraged loan market has suffered as loans exited to the bond market and leveraged loan volume was outstripped in the first quarter of 2013 by the high-yield bond market, where issuance hit an all-time high of $45.5 billion. "Transatlantic financing deals have broken down barriers and a number of European funds have taken European tranches of covenant-lite deals. Investors can no longer say that Europe does not do covenant-lite," a European loan syndicate head said. Elior's sale has attracted early interest from buyout firms including BC Partners BCPRT.UL and CVC Capital CVC.UL, which could team up to make a joint bid. Sponsors have asked if banks will arrange a covenant-lite deal to back the buyout but are also considering asking for the same structure on a number of other potential LBOs in the pipeline, including German energy-metering firm Ista CHCAPI.UL. "This is a buyers' market as there haven't been too many LBOs this year and cash-rich investors are eager to do deals. Sponsors will push for covenant-lite and if the credit is strong and the debt a good size, then absolutely sponsors will give it a crack and ask whether it can be done," the syndicate head said. PUSH BACK Despite leveraged loan funds becoming increasingly accustomed to covenant-lite deals, they are still cautious of them due to push back from their own investors. When fundraising, one of the strong selling points is that the European loan market still benefits from covenants. "Investors of the investors could push back as the security of having covenants on deals is a great selling point when fundraising," the syndicate head said. Bankers also prefer protections in a difficult economic environment. "I wouldn't underwrite a pure covenant-lite deal to euros with no protections. Banks want to be in a loan that looks like a loan and don't want to do anything that requires policy exceptions," a second European loan syndicate head said. There are compromises that could be introduced that would see some covenants dropped and others retained. A "covenant-loose" deal could see the removal of fixed charge covenants and free cashflow covenants - two protections that are most under threat in the short term, bankers said. A "covenant-lame" deal has covenants that only kick in when more than 25 percent of a revolver is drawn. "The way to do it would be to launch with covenants and then rip them out," the second syndicate head said. The first syndicate head said: "Any bank that goes covenant-lite will need some pretty big balls because it has not been done yet and it will get some resistance." (Editing by Christopher Mangham )

Cyprus to have 4 percent/GDP primary surplus from 2017 onwards: MoU. The document lists fiscal steps, as well as reforms of public administration, pensions, healthcare, labor market privatization and services that the Mediterranean island agreed to undertake in exchange for euro zone financial aid. According to the memorandum of understanding (MoU), obtained by Reuters, Cyprus will have a budget deficit before debt servicing costs of 395 million euros or 2.4 percent of GDP this year, a bigger gap than the 1.9 percent of GDP in 2012. Next year the primary deficit will grow to 678 million euros or 4.25 percent of GDP and then shrink to 344 million or 2.1 percent of GDP in 2015. In 2016, the island is to reach a primary surplus of 204 million euros or 1.2 percent of GDP and 4 percent from 2017 onwards. (Reporting By Jan Strupczewski ; Editing by Adrian Croft )

Cypriot finance minister resigns. (Reporting by Michele Kambas , Writing by Deepa Babington)

Health insurers lift U.S. stocks; commodities slide. Gold fell to a 2-1/2-week low, pressured by the strengthening dollar and as investors moved away from safe havens and bought stocks. Other commodities also retreated, with copper falling to a seven-month low on worries about global economic growth. Investors looked toward policy meetings this week of the Bank of Japan and the European Central Bank, along with the U.S. government's release on Friday of its payrolls report for March. On Wall Street, stocks rebounded after declining on Monday. Healthcare shares surged on brighter earnings prospects as the U.S. government dropped plans to decrease payments for private Medicare Advantage insurers, opting instead to raise them by 3.3 percent. "Given how lean these companies are, this news is pretty significant and could mean a 10 to 15 percent increase in earnings," said Phil Orlando, chief equity market strategist at Federated Investors in New York. News that Cyprus concluded bailout talks added to the gains. The Dow Jones industrial average .DJI gained 89.16 points, or 0.61 percent, to 14,662.01. The Standard & Poor's 500 Index .SPX rose 8.08 points, or 0.52 percent, to 1,570.25. The Nasdaq Composite Index .IXIC added 15.69 points, or 0.48 percent, to 3,254.86. The S&P 500 set an all-time closing high last week, but has stayed shy of its intraday record of 1,576.09. European shares rallied after a two-week slide, boosted by Vodafone on rumors of a multi-billion-pound break-up bid for the UK telecoms group. Europe's FTSEurofirst 300 index .FTEU3 gained 1.3 percent to end at 1203.79 points. The broad MSCI world equity index .MIWD00000PUS rose 0.4 percent to 359.84 points. The dollar rose 0.2 percent to 93.39 yen. The BoJ begins a two-day meeting on Wednesday and is widely expected to ramp up its bond buying and to extend the maturities of the bonds it purchases under its new governor, Haruhiko Kuroda. The euro fell 0.2 percent to $1.2816 after Markit's Euro zone Manufacturing PMI fell in March to 46.8 from 47.9 in February, the 20th straight month that the index has come in below the 50 mark that separates growth and contraction. The data boosted expectations that European Central Bank President Mario Draghi will strike a more dovish tone at the ECB's monetary policy outlook meeting on Thursday and could provide hints about a possible rate cut. "We expect euro zone fundamentals to deteriorate further. This, combined with outflow pressures, should keep the euro's downward trend intact," said Camilla Sutton, chief currency strategist at Scotiabank in Toronto. COMMODITIES RETREAT Spot gold hit an intraday high of $1,603.60 an ounce before falling to $1,575 an ounce, down from $1,598.40 on Monday. It hit an intraday low of $1,573.39, its lowest price since March 8. "The hot money is going toward the S&P 500 right now," said Jeffrey Sica, chief investment officer of SICA Wealth Management, which oversees more than $1 billion in assets. "There is an overwhelming sentiment that growth will remain slow and not inflationary, and that has eliminated some of the momentum investors in gold," Sica said. Benchmark copper on the London Metal Exchange hit a session low of $7,439 a metric ton (1.1023 tons), its weakest since August 21, and closed at $7,465 a metric ton. Disappointing manufacturing data from the euro zone, the United States and China stoked demand worries for the metal, which is used in power and construction. Silver dropped almost 3 percent to an eight-month low, and platinum group metals declined sharply. Oil prices declined as ample supplies and concerns over the pace of economic recoveries in the United States and Europe outweighed the prospect of stronger demand in Asia. Brent slid 39 cents to settle at $110.69 a barrel. U.S. crude rose 12 cents to settle at $97.19 a barrel. Safe-haven government debt prices also declined. Benchmark 10-year Treasury notes were down 8/32, their yields rising to 1.862 percent from 1.84 percent on Monday. German Bund futures also fell. (Additional reporting by Ryan Vlastelica , Gertrude Chavez-Dreyfuss and Frank Tang in New York; Editing by Leslie Adler)

Tesla launches financing product for electric sedan. Tesla, producer of the first fully electric sports car, said earlier this week it had its first profitable quarter ever in the first quarter thanks to stronger-than-expected sales of its Model S sedan, its second car model which is substantially cheaper than the first. Tesla's partner banks have agreed to provide 10 percent down financing for purchases of the Model S, the company said in a statement. The vehicle's price starts at $62,400 after a $7,500 federal tax credit. "This is going to fundamentally improve the affordability of the car," Tesla Chief Executive Elon Musk said on a conference call to discuss the announcement. The offering combines ownership with the advantages of a traditional lease, Tesla said. Buyers will still be able to utilize federal and state tax credits available to electric vehicles. Those would not be available to a traditional lease. After 36 months, the customer has the right to sell the vehicle to Tesla at a residual value percentage equal to that of the Mercedes S class of sedans. There is no obligation to sell, however. If customers elect to keep the car, it would be paid off after 66 months, Musk said. Musk, who is worth an estimated $2.7 billion, said he is personally guaranteeing the resale value of the car. "I will stand by the residual value if Tesla cannot," he said on the call with reporters. "With all the value of the assets I have at my disposal." Musk's guarantee is intended to give peace of mind to customers who may be skittish about the future of an electric car company, he said. Musk had been teasing the announcement on Twitter for the last week. "Am going to put my money where my mouth is in v major way," he tweeted on March 25. (Reporting By Nichola Groom; Editing by Gary Hill and Andrew Hay)

Cyprus names Georgiades as new finance minister. Georgiades will be sworn in on Wednesday, a government statement said. Georgiades was labor minister and deputy finance minister in Cyprus's government, which assumed power barely a month ago and is coping with a severe banking crisis after imposing losses on depositors as part of its 10-billion euro EU/IMF bailout. (Reporting by Michele Kambas , writing by Harry Papachristou)

Analysis: Spills flame Canadian oil debate, but won't curb flows to U.S. The fate of Keystone remains undecided, yet Canadian crude will become an increasing part of the U.S. energy mix, despite growing competition from new U.S. production. U.S. thirst for Canadian crude has shot up nearly 30 percent over the past five years as refiners opt to buy from the north instead of bringing in more expensive OPEC oil, thanks to a boom in production from the vast Alberta oil sands. Midwest refiners have invested billions of dollars to tweak plants to take more of the heavy crude from the region, and a small but growing network of rail routes have sprouted up to augment existing pipelines. So even as environmentalists seized on oil spills last week in Arkansas and Minnesota to warn about the impact of expansion in the tar sands -- the world's third-largest crude deposit -- it appears only a crash in the price of oil or unexpected regulation will derail the growing energy interdependence. "Short-term, this is not good for producers, it's not good for Canadian oil going south, it's not good for Keystone," John Stephenson, vice-president and portfolio manager at First Asset Investment Management in Toronto said of the two spills. "But I think the reality is this oil is going to make it south of the border, quite likely by rail or one of the other pipelines across the Canadian-U.S. border, so I see it as a short-term hiccup at worst." Canada's black gold has allowed the Obama administration to crow about dwindling reliance on oil from less-friendly suppliers in the Middle East and elsewhere. In addition, a glut of the Canadian heavy oil has tempered higher gasoline prices, especially in the U.S. Midwest. That may trump increasingly bad PR for Canada's oil, much of which is produced by energy- and carbon-intensive methods such as mining or steaming, making it a prime target in the battle over policies to fight global warming. Yet the growing role of Canadian crude in the U.S. economy cannot be denied. Overall U.S. oil imports fell to 8.5 million barrels a day last year from over 10 million in 2007, but supplies from Canada jumped to 2.4 million barrels a day, from just under 1.9 million, over the period, according to the U.S. Energy Information Administration. That puts Canadian crude at nearly 29 percent of foreign supplies in the United States, despite the remarkable increase in U.S. domestic light oil output from regions such as the North Dakota Bakken that has fueled predictions of North American energy self-sufficiency in 15 years. In fact, the two types of crude compete little for refinery space, as Canada's heavy crude is being directed at U.S. Gulf Coast plants that are configured to process heavy oil, which now arrives in dwindling volumes from Venezuela and Mexico. "If that's the case, then Obama's left with not an energy choice -- he's left with a geopolitical choice," said Michal Moore, director of energy and environmental policy at the University of Calgary's School of Public Policy and a former California energy regulator. "Do you want to piss off Canada by not letting oil into the refineries that can handle it most easily? I don't know how he makes that judgment but I will say that this doesn't help." Other refiners have also invested to process more feedstock from Canada, with BP sinking $4 billion into its Whiting, Indiana plant to take more of the heavy, sour oil. In addition to heavy tar sands oil, Canada also exports large volumes of conventional lighter crude. In January, the U.S. imported over 1.5 million bpd of heavy Canadian crude, defined by the Canadian Association of Petroleum Producers as having an API Gravity of less than 27 degrees, and nearly 1.15 million bpd of lighter, easier to refine oil, according to the EIA. PIPELINE, RAIL ACCIDENTS Last week's spills both involved oil from Canada. On Friday, Exxon Mobil Corp's aging Pegasus pipeline ruptured in Arkansas, forcing a cleanup of thousands of barrels of heavy Canadian oil that leaked into a suburban neighborhood. The incident followed an oil spill in rural Minnesota on Wednesday after a Canadian Pacific Ltd train derailed. The tanker-car leaked several hundred barrels of Alberta crude and reignited concern about oil moving by train as pipeline capacity lags production growth. Producers shipped about 45,000 barrels of Canadian oil into the United States by train last year, up from almost nothing just five years earlier, based on Reuters calculations of data from Canada's National Energy Board. Current shipments could be as much as 150,000 barrels a day, estimated Steven Paget, analyst at FirstEnergy Capital Corp. The spills are the latest in a string of problems for shippers of Canadian crude that have inflamed the debate over the oil sands. The largest spill was the Enbridge Inc line break in Michigan in 2010, which sent more than 20,000 barrels of Canadian oil into the Kalamazoo River system. U.S. regulators last month ordered Enbridge's U.S. affiliate to do more cleanup at the site, pushing the bill to near $1 billion. TransCanada Corp, backer of the long-delayed $5.3 billion Keystone XL pipeline to Texas refineries from Alberta, and the line's supporters, say oil spills highlight the need for safer energy infrastructure rather than a shift from pipelines. "I don't think it will have an impact (on Canadian exports and the approval of pipelines). Look, it's being seized on by those who oppose hydrocarbon development, but if you follow their logic to its conclusion, what they're saying, I guess, is they don't want to see any pipelines built," Canadian Natural Resources Minister Joe Oliver said of the Arkansas spill. "It's not because of Canadian crude that there was a spill. It was an old pipeline, more than 60 years old." Oliver has led Ottawa's intense lobbying campaign in favor of the 830,000 barrel a day Keystone XL project, which will take Canadian crude to Gulf refineries. Washington is set to decide on the line this summer and it could be in service in 2015. PRODUCTION PREDICTION All predictions are for a steady climb in Canadian production, explaining the industry and government's quest for new markets in the United States and non-traditional areas such as Asia, one of the biggest drivers engines of world oil demand growth. Canada's National Energy Board has predicted output will average 3.6 million barrels a day this year, up 12.5 percent from 2012, putting it nearly 400,000 barrels a day ahead of No. 2 OPEC producer Iraq's current output. The industry sees a jump in output to 4.7 million barrels a day by the end of the decade, with new pipelines such as Enbridge's contentious Northern Gateway to Canada's Pacific Coast and TransCanada's Energy East line to the Atlantic provinces planned to move much of the increase. Last week, Wood Mackenzie, the energy research firm, predicted output of bitumen from the oil sands, will increase by 540,000 barrels a day over the next two years. Almost three-quarters of that will come from projects that have already been approved and have a break-even oil price below $60 a barrel, WoodMac said. The current price for Canadian heavy oil is about $80 a barrel. (Additional reporting by Scott Haggett in Calgary and Patrick Rucker in Washington; Editing by Janet Guttsman , Matthew Robinson and Leslie Gevirtz )

Insight: Payments for mom-and-pop stock orders reveal conflicts. Discount brokers send retail orders to market makers, which match buy and sell orders, and promise to try to get a better price than the one publicly posted by equities exchanges, in return for a fee. In interviews, more than a dozen current and former executives from the brokerage, market-making and exchange industries said escalating fees create a conflict of interest for brokers, who have an incentive to fatten their own bottom lines rather than get the best deal for their customers. It means they might send orders to market makers even if they could have gotten a better trade price elsewhere. The growth of the practice may be yet another sign that retail investors face disadvantages in U.S. equity markets compared to institutional players, despite vast improvements in transparency, speed and prices over the past decade. "Payment for order flow is on an uphill climb, and in these markets, there has to be questions about how those conflicts are being reined in," said Chris Nagy, president of consulting firm KOR Trading LLC and former head of TD Ameritrade Holding Corp's order routing operations. "It's an area that needs more scrutiny." The practice is banned in Canada, while Australia has proposed doing the same, and tighter controls have been introduced in the UK. But it remains legal in the United States, where it was pioneered in the 1980s by Bernie Madoff. (Madoff was convicted in 2009 for a massive fraud unrelated to the practice.) Industry executives said U.S. regulators have been paying it scant attention even as the amount changing hands is increasing. The Securities Exchange Commission, which requires firms to submit quarterly reports detailing their payment for order flow agreements and monthly reports on best execution, declined to comment. Two people familiar with the regulator's thinking said that it is cognizant of the "inherent conflict" in payment for order flow, but has no near-term plan to increase its scrutiny of the practice. The brokers are particularly keen to boost the fees they receive for order flow and market makers are willing to pay more because they both need to offset revenue declines amid lower trading volumes in the aftermath of the financial crisis. In a sign of how important the practice has become, market makers are falling over one another to get a piece of a Charles Schwab Corp contract that comes up for grabs next year, industry executives said. If retail investors are suffering from the practice they probably wouldn't notice it because the amounts concerned would be small on a per-trade basis. But the fee payments can add up to hundreds of millions of dollars. A Reuters review of the five largest U.S. discount brokers - TD Ameritrade, E*Trade Financial Corp, Fidelity Investments, Scottrade Inc and Schwab - found payments from market makers of as much as 32 cents per 100 shares in the fourth quarter. An SEC study estimated eight brokers received only as much as 10 cents per 100 shares in the second quarter of 2009. While the SEC did not name the brokers, it did say that the survey included those with substantial retail customer accounts, which would include the big five discount brokers. All the major market makers, including units of Knight Capital Group, E*Trade, Citadel LLC, Citigroup Inc and UBS AG, pay fees, according to regulatory filings. Full-service brokers, such as Bank of America Corp's Merrill Lynch and Wells Fargo & Co, do not accept such payments, but charge significantly higher trading commissions. Many large institutional investors do not allow their managers to engage in payment for order flow arrangements or other such incentives, demanding only best execution of their trades, said Andrew Lo, the director of the Laboratory for Financial Engineering at the MIT Sloan School of Management. Executives from market makers argue they need to pay the fees to get the order flow and remain competitive. They say that the payments squeeze their profit margins and it doesn't mean they provide worse pricing. Brokers say the payments do not impact how they route orders and the investors get the best possible deal. They also say the revenue allows them to pass on benefits to retail investors such as cheap trades, quick execution, free research and real-time market data. TD Ameritrade constantly monitors market makers to ensure clients get the best deal, said Paul Jiganti, who heads the firm's routing strategy. It is able to provide customers with free services partly by "using the money from payment for order flow," Jiganti added. One market-making executive with direct knowledge of TD Ameritrade's order flow revenues estimated the broker brought in $200 million from the practice last year, or about 8 percent of its revenue and more than 20 percent of its pre-tax income in the fiscal year to last September. TD Ameritrade does not publicly disclose the figure. Schwab, Scottrade and E*Trade declined to comment as did the market makers Citadel, UBS and Knight. Citigroup did not respond to requests for comment. 'MORE ART OVER SCIENCE' Industry executives said brokers have leeway in determining what the best deal is for the client. Brokers are required to send retail orders to trading platforms that offer "best execution," which includes a number of factors, such as price and execution speed, creating a gray area around how exactly the best possible trade should be measured. The Financial Industry Regulatory Authority does not normally second-guess order routing decisions, but it does examine individual trades to ensure they were completed efficiently and at the best price available, said Tom Gira, head of market regulation at FINRA, which has brought about 43 actions involving equities best execution violations since 2010, with fines totaling around $671,500. Still, all other things being equal, FINRA has said brokerages can consider payment for order flow when making order routing decisions, Gira said. "I think what that's led to is a lot...of ambiguity," he said. "It's kind of more art over science." Brokers don't always get it right. For example, E*Trade recently disclosed shortcomings in how it measured trade execution quality for orders sent to its market making unit, G1 Execution Services. E*Trade sends about 46 percent of its orders to G1, according to a filing. The company's methods were called into question by Kenneth Griffin, who until recently was an E*Trade director and who also runs Citadel, which competes with G1. E*Trade said it changed its practices to comply with regulations, and declined to comment further. One firm that receives lower fees is Fidelity. That is partly because it has very high standards for the execution of trades, demanding more than its major rivals - particularly when it comes to improving on available prices, industry insiders said. Fidelity also allows institutional investors to trade against its retail flow before routing it to brokers, which makes the order flow less valuable to others. A Fidelity spokesman said it always tries to get best execution for its clients but declined to comment further. One of Fidelity's top destinations for order flow in the fourth quarter was Knight, which paid it 5 cents per 100 shares. In comparison, Knight paid TD Ameritrade less than 30 cents per 100 shares on average in the quarter, up from less than 20 cents six months earlier. Knight paid Scottrade 28 cents or less per 100 shares, up from 13 cents or less in the third quarter, regulatory filings showed. Overall last year, Knight paid $90.6 million to firms for order flow, up 7 percent from 2011, and more than doubling from $37.7 million in 2010. Other market makers as well as brokers do not disclose how much they pay overall for order flow, but available data all point to more money changing hands. The amount Schwab received, for example, rose by $23 million last year, according to a filing. It doesn't disclose the full amount. "The complexity of these arrangements and the lack of transparency really give rise to opportunities for conflicts of interest that probably outweigh the economic benefits of payment for order flow," MIT's Lo said. TALK TO CHUCK Next year, a long-time deal between Schwab and UBS, which takes nearly all of Schwab clients' stock orders, expires. Schwab's 8.8 million brokerage clients averaged 282,700 revenue-generating stock trades a day last year. While that is less than the nearly 360,000 trades a day by TD Ameritrade's 5.6 million clients, Schwab's order flow is seen as more valuable. The possibility of getting a piece of that contract was already creating buzz at an industry conference in Chicago in January, people who were at the event said. The practice flourishes around retail order flow, known in the industry as "dumb money." Mom-and-pop investors are typically less aware of short-term price movements in a stock, making it easy for firms looking to capitalize on price changes from one moment to the next to profit from retail orders. Schwab's client base is seen as less informed and less active than at other firms, said the market making executive, who attended the conference. "With Schwab, it truly is mom and pop buying Wal-Mart or Cisco or Target," the executive said. Schwab declined to comment on how its clients are perceived. Knight CEO Tom Joyce met with Schwab about a possible deal around four months ago, and lower-level meetings have been happening since, said a person with direct knowledge of the matter. Similar meetings have been happening between Schwab and the other major market markers, several sources said. Schwab denied it has met with any market makers on potential order flow deals. UBS declined to comment. (Reporting By John McCrank in New York; Editing by Paritosh Bansal , Martin Howell and Leslie Gevirtz )

Cyprus cannot say when capital controls will be eased. The island nation earlier on Tuesday announced a partial relaxation of currency controls that were introduced when banks reopened on March 28 after a two-week shutdown while the government negotiated a 10 billion euro ($12.85 billion) bailout. Under the terms of the bailout deal agreed earlier on Tuesday, the island will pay an interest rate of 2.5 percent on its rescue loans, with repayment starting in 10 years, the government spokesman said. The loans will repaid over 12 years, Sarris said. ($1 = 0.7784 euros) (Reporting by Michele Kambas , writing by Deepa Babington)

RBS lines up CFO van Saun to lead U.S. spin-off: source. The state-backed British bank could appoint Nathan Bostock, its head of restructuring and a former finance director of Abbey National, as van Saun's replacement. Bostock is highly regarded and is likely to be the front-runner if van Saun moves, though no decisions have been finalized, the source said on Tuesday. The Financial Times, which first reported the possible changes, said they could be announced within a matter of weeks. RBS declined to comment. American van Saun has been RBS finance director since October 2009 and has helped Chief Executive Stephen Hester to cut the bank's bloated balance sheet under a five-year turnaround plan. He would replace Ellen Alemany as head of Citizens. RBS said in February that it would sell 20-25 percent of Citizens through a stock market listing in the next two years after Britain's financial regulator put pressure on the bank to strengthen its capital position. RBS, 82 percent owned by the UK taxpayer after it was saved from collapse in 2008 with a 45 billion pound ($68 billion)bailout, has shed about 900 billion pounds of assets and is under pressure to focus its lending on British households and small businesses. The bank is still making a loss, dragged down by the running down of its "non-core" loans and compensation for past mis-selling, but its core business is profitable and Hester said that his turnaround is on track. Van Saun was previously chief financial officer at Bank of New York Mellon ( BK.N ), where he worked from 1997 to 2008. He has also worked at Deutsche Bank ( DBKGn.DE ), Wasserstein Perella Group and Kidder Peabody & Co. Bostock, another key figure under Hester, has been head of risk and restructuring at RBS since June 2009, selling off non-core loans. He had planned to move to Lloyds Banking Group ( LLOY.L ) in late 2011, but he backtracked after a health scare for Lloyds CEO Antonio Horta-Osorio, who had tried to recruit him. The key challenge for RBS's new finance director is to make the bank sufficiently attractive for the government to start selling its holding, which it is keen to do next year. RBS is still shrinking its investment bank and trying to sell a portfolio of 315 UK branches. It also needs to complete the sale of its holding in insurer Direct Line ( DLGD.L ). ($1 = 0.6610 British pounds) (Editing by Carmel Crimmins and David Goodman)

Cyprus finance minister quits after bailout concludes, investigation begins. Michael Sarris, a lead player in talks with International Monetary Fund and European Union lenders, said he had completed his task but also that he was likely to come under scrutiny in an investigation into the crisis. Tuesday's deal, which requires ratification from national EU parliaments and euro zone finance ministers, will see Cyprus receiving a 10 billion euro loan, carrying an interest rate of approximately 2.5 percent. It is repayable over a 12 year period after a grace period of a decade. "This is a very important development which ends a very long period of uncertainty," said Christos Stylianides, Cyprus's government spokesman. Sarris said he expected the first disbursement of aid in May. Compared with a previous draft deal with lenders brokered in November, Tuesday's agreement gave authorities additional room to reach a primary surplus by 2018, longer than an initial 2016, Stylianides said. Cyprus's status as a financial hub, meanwhile, has all but crumbled in the space of a fortnight. Authorities were forced to wind down one bank and impose heavy losses on wealthier depositors in a second in return for the financial aid. When banks reopened after a two-week lockdown last week, Cypriots were faced with currency controls to prevent a run on banks, unprecedented in the history of the 17-member euro zone. In the event, there was no run. PROBE FOR POSSIBLE OVERSIGHTS Conservative President Nicos Anastasiades, in the job for a little over a month, appointed judges on Tuesday to investigate possible political and regulatory failures in the island's economic demise, as well as the role of banks. Sarris, who was dispatched to Moscow last month but returned empty-handed as Cyprus sought Russian aid after parliament rejected a European bank levy proposal, said his main goal of agreeing a deal with lenders had been accomplished. But he said it was also appropriate to resign since his previous role as chairman of the Popular Bank, or Laiki, - the island's second largest lender wound down under terms of the bailout - was also likely to come under scrutiny. "I believe that in order to facilitate the work of (investigators) the right thing would be to place my resignation at the disposal of the president of the republic, which I did," said Sarris, who headed Popular for a few months in 2012. Anastasiades, who appointed three retired Supreme Court judges to run the inquiry on Tuesday, said nobody would be exempt from the probe, starting with the legal business he once headed, and family connections. A list of business which had moved money out of Popular in the run up to the bailout deal included a company in Limassol, whose owners are related to Anastasiades by marriage. The list, produced in the Communist party newspaper Haravghi on Sunday and reproduced by other media, said the company, A. Loutsios and Sons, had moved some 21 million euros out of the bank. The company said it had moved 10.5 million euros to Barclays Bank Plc in Britain, and the remaining amount to Bank of Cyprus in order to complete real estate transactions. "We do not hide behind companies but acted, as we always do, with full transparency in our banking transactions," the company said, referring to the fact it was clearly identifiable in the list. "Our actions are always based on sound business motives and as such, any implication of alleged privileged access to information is nothing but malicious and slanderous," it said. An earlier statement by the company said it had a balance of uninsured deposits in Popular, now being wound down, of 7.32 million. It also had uninsured deposits of 20.6 million in Bank of Cyprus, part of which was being converted to bank equity under a process to make depositors pay for recapitalizing the bank, known as a "bail-in". CAPITAL CONTROLS Sarris will be replaced with Harris Georgiades, who has held the labor ministry post in Anastasiades's four-week administration. Cyprus's previous Communist administration first sought aid from the "Troika" of IMF, EU and European Commission last year. That government was severely criticized for passing the buck onto the incumbent conservatives knowing full well they could not win general elections held last February. "Unquestionably, the deal with the Troika should have been completed earlier," said Stylianides, the spokesman. Cyprus earlier announced a partial relaxation of currency controls, raising the ceiling for financial transactions that do not require central bank approval, but keeping most other restrictions in place. Before resigning, Sarris said it was not clear when the remaining capital controls would be lifted. "We would want to ease restrictions the soonest possible, but also have to ensure that stability (in the banking system) prevails," he said. The island introduced curbs on money movements when banks reopened on March 28. A finance ministry decree on Tuesday, the third since controls were first introduced, raised the ceiling on transactions which do not require central bank approval to 25,000 euros from 5,000 euros. It also permits the use of cheques worth up to 9,000 euros per month. Other restrictions introduced last week, including a 300 euro per day cash withdrawal limit and a 1,000 euro limit on the amount travelers can take overseas, remain in place. The decree - signed by Sarris and dated April 2 - is valid for two days. Cypriot officials have said it could take up to a month for restrictions to be fully removed. Cyprus last week agreed to break up its No. 2 lender Popular Bank, kept on an ECB liquidity lifeline for months, into a "good" and a "bad" bank. The bank's "good" assets will be transferred to Bank of Cyprus, where depositors have been forced into accepting massive losses on uninsured deposits of more than 100,000 euros. The process sees 37.5 percent of deposits exceeding 100,000 euros converted into equity in the bank, and an additional 22.5 percent used as a buffer which could also be converted into equity if circumstances warrant it. In a deal brokered early on Tuesday morning, it was also agreed that a small portion of the remaining 40 percent in uninsured deposits effectively frozen under the arrangement, 10 percent, be unblocked. (Editing by Jeremy Gaunt , Ron Askew.)

Glencore pushes back Xstrata deal due to China probe. Glencore has been waiting for several months for China, the biggest buyer of the materials it trades and mines, to give the go-ahead before it can complete its $35 billion acquisition of miner Xstrata, the largest deal in the sector to date. Glencore said on Tuesday it had held constructive discussions with China's Ministry of Commerce, or MOFCOM, but that it had pushed the deadline date back to May 2 because it did not expect to have the final approval in time for its previous deadline of April 16. The merger date has been pushed back several times, with Glencore saying in March that MOFCOM was focusing its attention on copper. MOFCOM is the only one of the world's main watchdogs to take national industrial policy into consideration in its decisions. "Glencore believes that it has had constructive discussions with the Ministry of Commerce of the People's Republic of China (MOFCOM) and that these discussions are now in their final stages," the group said in a statement. "However, Glencore does not expect to receive the final decision from MOFCOM in time for the merger to be completed by 16 April 2013." (Reporting by Kate Holton , editing by Paul Sandle and Rosalba O'Brien)

Exclusive: Nationwide, Reich & Tang to buy HighMark funds -sources. San Francisco-based UnionBanCal is expected to announce the sale of its HighMark Funds to the two parties in the next few days, said two of the sources, who wished to remain anonymous because they are not permitted to speak to the media. UnionBanCal is selling 19 of its 24 HighMark Funds to Nationwide Financial, the two sources said. Nationwide's funds group, based in Philadelphia, is made up of 91 funds that had $45 billion in assets under management as of December 31. Through the sale, Nationwide will be adding another $4 billion in funds to its group, based on Lipper data. UnionBanCal is selling its five money market funds, which have $4.2 billion in assets, to Reich & Tang, a New York-based subsidiary of Natixis Global Asset Management, S.A., the two sources said. It could not be determined how much Nationwide and Reich & Tang are paying for the funds. A UnionBanCal official was not immediately available to comment, a spokeswoman said. Nationwide and Reich & Tang declined to comment. UnionBanCal, which had $97 billion in assets at December 31, 2012, is a subsidiary of Mitsubishi UFJ Financial Group Inc. The firm joins a number of U.S. financial institutions that are shedding their asset management arms to focus on core banking businesses. Atlanta-based SunTrust Banks Inc is in talks to sell its RidgeWorth Asset Management and is also expected to announce a deal shortly. Given how difficult it is for firms to make money offering money market funds in the current low interest rate environment, along with the potential for regulatory reform of money market funds, it makes sense that Highmark is getting out of the business, said Jeff Tjornehoj, an analyst at Lipper. "The money market industry is skating on thin ice as far as profits go, so I can understand why they would sell it," Tjornehoj said. "It's a business that relies on scale and with $4 billion, that is simply not enough." (Reporting by Jessica Toonkel; Editing by Bob Burgdorfer , Nick Zieminski and Andre Grenon )

Cyprus partially eases capital controls in new decree. The island introduced curbs on money movements when banks reopened on March 28 after a two-week shutdown while the government negotiated a 10 billion euro bailout from the International Monetary Fund and the European Union. Cyprus's status as a financial hub has crumbled in the space of a fortnight after authorities were forced to split one bank and slap heavy losses on depositors in a second in return for the financial aid. Its capital controls are a first for the euro zone, introduced by Cyprus as it strives to prevent a cash drain. A Finance Ministry decree on Tuesday, the third since controls were first introduced, raised the ceiling on transactions which do not require Central Bank approval to 25,000 euros from 5,000 euros. It also permits the use of cheques worth up to 9,000 euros per month. Other restrictions introduced last week, including a 300 euro per day cash withdrawal limit and a 1,000 euro limit on the amount travelers can take overseas, remain in place. The decree - signed by Cypriot finance minister Michael Sarris and dated April 2 - is valid for two days. Cypriot officials have said it could take up to a month for restrictions to be fully removed. Cypriot President Nicos Anastasiades, who has been in power for just over a month, says he was forced to accept onerous terms imposed by lenders to avert a default and an exit by the island from the euro zone. On Tuesday, he appointed three retired Supreme Court judges to investigate political, civil and criminal responsibilities over the demise of the economy, one of the bloc's smallest. Cyprus last week agreed to break up its No. 2 lender Popular Bank CPBC.CY, kept on an ECB liquidity lifeline for months, into a "good" and a "bad" bank. The bank's "good" assets will be transferred to Bank of Cyprus BOC.CY, where depositors have been forced into accepting massive losses on uninsured deposits of more than 100,000 euros. The process, known as a "bail-in" sees 37.5 percent of deposits exceeding 100,000 euros converted into equity in the bank, and an additional 22.5 percent used as a buffer which could also be converted into equity if circumstances warrant it. In a deal brokered early on Tuesday morning, it was also agreed that a small portion of the remaining 40 percent in uninsured deposits effectively frozen under the arrangement, 10 percent, be unblocked. The Cypriot government had unsuccessfully argued that the entire 40 percent be unblocked, a source familiar with the consultations said. (Reporting by Michele Kambas ; Editing by Catherine Evans )

India's Ambani brothers move past feud with telecom pact. Reliance Industries ( RELI.NS ), controlled by Mukesh Ambani, India's richest person, will pay 12 billion rupees ($221 million) to younger brother Anil Ambani's Reliance Communications ( RLCM.NS ) for use of its fiber optic network. The companies said on Tuesday they could co-operate further in future and the announcement bolstered their share prices. Reliance Industries, whose main business is petrochemicals, made a dramatic return to telecoms in 2010 by becoming the only company to gain nationwide 4G airwaves. While it has yet to start services, it is widely expected to begin operations in parts of India later this year. Debt-laden Reliance Communications, India's third-largest cellular carrier by users, was hived off from the combined Reliance empire after the brothers split up the family businesses in 2005 in a deal brokered by their mother. Under the terms of Tuesday's fiber optic deal, Reliance Industries will pay "one time indefeasible right to use (IRU) fees for sharing RCOM's nationwide inter-city fiber optic network infrastructure," the companies said. Reliance Communications shares jumped as much as 17 percent after the news before closing 11 percent higher. Other Anil Ambani group stocks also gained. Reliance Industries' stock closed up 2 percent. MORE CO-OPERATION Further details on the tie-up were not immediately available, but the companies indicated more cooperation was possible. Media reports have long speculated that Reliance Industries would lease space on Reliance Communications' tower network or buy an equity stake in the tower business. "This agreement is the first in an intended comprehensive framework of business co-operation ... for optimal utilization of the existing and future infrastructure of both companies on reciprocal basis, including inter alia, inter-city fiber, intra-city fiber, towers and related assets," the companies said. Reliance Communications is the most leveraged among Indian cellular carriers with net debt of nearly $7 billion, or more than five times its annualized operating profit. The company has been looking to sell assets to cut its debt load but has fallen short in several attempts. "It is definitely a relief for Reliance Communications, and a relief coming to the group after a long, long time even though not sufficiently large," said Jagannadham Thunuguntla, strategist at SMC Global Securities in New Delhi. Tuesday's deal will help Reliance Jio Infocomm "reach the market faster," said Deven Choksey, managing director of K.R. Choksey Securities in Mumbai. According to Forbes, Mukesh Ambani is worth $21.5 billion, while Anil Ambani is worth $5.2 billion. Dhirubhai Ambani's death in 2002 led to a power struggle between his two sons that split the Reliance empire. Mukesh ended up with the core energy business, and Anil ended up with the telecoms, financial services and power businesses. ($1 = 54.3500 Indian rupees) (Reporting by Devidutta Tripathy and Aradhana Aravindan; Editing by Tony Munroe/Ruth Pitchford)

Pension plan advisors see top gains in emerging market stocks. The survey, which tracked 51 consulting firms, found that many of them expect emerging market stocks to outperform all other asset classes, but with greater volatility. In addition, 65 percent of the firms expect lower returns and higher volatility in various asset classes over the next two to five years. The findings come as investment returns from "junk" bonds and government guaranteed mortgage securities to even some battered euro-zone debt have dropped against the backdrop of global central bank policies intended to suppress borrowing costs. Corporate pension plans are hard-pressed to generate profits amid a low interest-rate environment and rising funding shortfalls. The 100 largest U.S. pension plans had a record funding deficit of $388.8 billion at the end of last year, a $61.1 billion increase from 2011, according to consulting firm Milliman, Inc. A significant portion of the consulting firms in the PIMCO survey, which advise an average of $48 billion each in 401(K) plan assets, forecast that emerging market stocks will earn a 10 percent return over the next three to five years. Despite that strong forecast and expectations of lower returns overall, 60 percent of the firms recommended cutting exposure to risk assets, including stocks. Among the firms, 81 percent also suggested adding inflation-protected securities, including Treasury Inflation-Protected Securities, to retirement portfolios. Among the firms, 78 percent also predict that corporations will add global stocks to their retirement plans. Newport Beach, California-based Pacific Investment Management Co., or PIMCO, has conducted the Defined Contribution Consulting Support and Trends Survey annually for the past seven years. PIMCO had $2 trillion in assets at the end of last year. The company, run by founder and co-chief investment officer Bill Gross and chief executive and co-chief investment officer Mohamed El-Erian, runs the PIMCO Total Return Fund, the world's largest mutual fund with over $288 billion in assets. PIMCO also managed nearly $174 billion in retirement plan assets as of December 31, 2011. Gross has warned of lower returns on financial assets, particularly high-yield bonds and stocks, in his monthly letters to investors. Many of the consulting firms surveyed, which included JP Morgan Performance Analytics & Consulting and Morgan Stanley Smith Barney, recommended adding emerging market bonds, commodities, and high-yield "junk" bonds to retirement portfolios in target-date funds. Among the firms, 61 percent said that emerging market debt would be valuable to add, while 49 percent vouched for commodities and 39 percent vouched for high-yield. Nearly all of the firms - 98 percent - also suggested that companies offer target-date and target-risk strategies in retirement plans. Target-date strategies aim for a retirement date and shift asset allocation from riskier assets like stocks to more stable assets like bonds as the retiree ages. (Reporting by Sam Forgione; Editing by Jennifer Ablan and Jim Marshall )

Dow Jones closes at all-time high. Tuesday's record finish is the 15th record close for the blue-chip Dow average since the beginning of October. Traders said a key technical breakout in the S&P 500 fueled buying momentum, while a report showing that the core U.S. Producer Price Index, stripping out food and energy costs, had its sharpest tumble in more than 13 years in October, also lent support. "There's a general sense of confidence in the economy still," said Steve Goldman, market strategist at Weeden & Co., in Greenwich, Connecticut. "We're seeing evidence of that in the retail earnings that came out today." The Dow Jones industrial average shot up 86.13 points, or 0.71 percent, to end at a record 12,218.01. The Standard & Poor's 500 Index gained 8.80 points, or 0.64 percent, for a close at 1,393.22. The Nasdaq Composite Index rose 24.28 points, or 1.01 percent, to 2,430.66. The PPI data reduced concerns about inflation and reinforced expectations that the Fed will keep interest rates steady, while some believed the weak PPI reading increased the chances of a rate cut sometime next year. VISIONS OF DISCOUNTED SUGARPLUMS Wal-Mart shares jumped nearly 3 percent, or $1.34, to $47.66 on the New York Stock Exchange, and were the Dow's second-biggest advancer. In the No. 1 spot was Home Depot Inc., whose stock reversed an earlier decline to end up 4.3 percent, or $1.56, at $37.96 on the NYSE. The S&P retail index climbed 2.4 percent, its biggest one-day percentage gain in two months. "Everybody worries about the holiday season, but then things come out better than expected. You can bet on that year after year," said Frank Gretz, market analyst and technician at Shields & Co., a brokerage in New York. Wal-Mart said it would further cut prices of toys and games in its fourth set of price reductions in categories including electronics, small appliances and toys. It also posted a stronger-than-expected quarterly profit and said deep discounts would drive better holiday sales. Rival Target reported a bigger-than-expected 16 percent increase in quarterly profit and gave a confident outlook for the holiday season despite fierce competition from Wal-Mart. Target shares rose 2.4 percent to $59.16. As for Home Depot's turnaround from a decline earlier in the session to a higher finish, traders said investors appeared to have long priced in the profit miss and the prospects for a bearish outlook that the No. 1 U.S. home improvement chain gave before the bell. S&P 500 BREAKS ABOVE 1,390 Analysts also said a key technical breakout in the S&P 500 fueled buying momentum. "In January 2001 and December 2000, the S&P could not get beyond 1,380. With today's move through 1,380 and 1,390, you have broken that top," said Bruce Zaro, chief technical strategist of Delta Global Advisors in Boston. Earlier, the Dow also hit a fresh intraday record high at 12,228.01, while the S&P 500 rose to 1,394.49, its highest since November 2000, and the Nasdaq reached 2,430.83, its highest since late February 2001. Among the Nasdaq 100's biggest advancers were shares of Qualcomm Inc., up 3.8 percent, or $1.36, at $37.56, and Intel Corp., up 4.2 percent, or 88 cents, at $21.88, a day after Citigroup added Intel to its recommended list. A DANISH SUITOR FOR PIER 1? Shares of U.S. home furnishings chain Pier 1 Imports Inc. surged 20.6 percent, or $1.30, its biggest one-day jump in more than seven years, to finish at $7.62 on the NYSE after sources familiar with the matter said Danish retail magnate Jakup Jacobsen is preparing to bid for the company. The stock hit a session high at $7.78, up 21 percent, and ranked second among the NYSE's biggest percentage gainers. In other economic news, Federal Reserve Bank of St Louis President William Poole said the odds of another rate hike were about the same as a rate cut, but the current posture of policy was correct. He also said home builder concessions to lure buyers may be hiding deeper price declines in U.S. housing markets. Volume was active on the NYSE, where about 1.72 billion shares changed hands, above last year's daily average of 1.61 billion. On the Nasdaq, about 2.02 billion shares traded, exceeding last year's daily average of 1.80 billion. Advancers outnumbered decliners by a ratio of more than 3 to 1 on the NYSE, while on the Nasdaq, more than two stocks rose for every one that fell. (Additional reporting by Chris Sanders )

Two bids submitted for Clear Channel: sources. Sources said that a bid by a consortium made up of Providence Equity Partners, Blackstone BG.UL and KKR KKR.UL was submitted on Monday. A second bid, from a consortium consisting of Bain Capital and Thomas H. Lee Partners THL.UL was also submitted on Monday, a separate source told Reuters. Texas Pacific Group, which had previously been involved in that consortium, was not part of the bid, the source said. Clear Channel was reviewing the bids at a board meeting on Tuesday, sources said. CNBC said earlier that an announcement could be made before the stock market opens on Wednesday, with bids at around the $36-a-share mark. That would value the company at about $18 billion. Clear Channel shares nudged 8 cents lower to $34.30 by lunchtime on the New York Stock Exchange. Clear Channel, which has about 1,150 stations, said last month that it was evaluating strategic alternatives for its business and had hired investment bank Goldman Sachs & Co. ( GS.N ) to advise it. KKR, Texas Pacific, Bain, Blackstone, Providence, Thomas H. Lee, Clear Channel and Goldman Sachs declined comment. A number of analysts have share price targets for Clear Channel in the mid-$30s and upward. Deutsche Bank, in a recent note, said its target of $36 took into account the possibility that Clear Channel would eventually accept a bid to go private. Bank of America analysts last month raised their fair-value range on the shares to $34-$40 from $34-$38, saying there were multiple strategic options the group could pursue, including taking the entire company private and spinning off its outdoor unit. Clear Channel has a majority ownership in outdoor advertising group Clear Channel Outdoor Holdings Inc. ( CCO.N ). Other interested parties have also been named by media reports. The Wall Street Journal reported on Thursday that two groups thought to be interested -- Apollo Management and Carlyle, and Cerberus Capital and Oak Hill Partners -- had largely faded out of the picture. Clear Channel, based in San Antonio, Texas, recently forecast strong fourth-quarter radio-advertising sales. It posted a 9.5 percent drop in third-quarter profit, reflecting the spinoff of its entertainment unit. Advertising-driven radio broadcasters such as Clear Channel have been challenged to develop new formats and technology in the face of growing competition from satellite radio, the Internet, and personal digital music players. Private equity firms typically buy companies with a small portion of their own cash and borrow the rest. They usually hold a business for three to five years, restructure it, then sell it, either to a buyer or on the open market in an initial public offering. In some cases, buyout firms "flip" an investment in a year or less when they think they can make a good profit.

CORRECTED: Wall St seen up slightly before price, retail data. By Marie Maitre PARIS (Reuters) - Shares on Wall Street are expected to open slightly higher at best on Tuesday as investors hope that retail sales data will show the U.S. economy is slowing but still strong enough to sustain future corporate profits. Investors will also scour the publication of U.S. producer prices, which many expect to be on the weak side after further declines in oil prices. Producer prices are expected to have fallen 0.5 percent in October, but to have risen 0.1 percent excluding volatile food and energy prices. <ID:nN13186788> "This data should confirm a slowdown in inflation," CM-CIC economist Valerie Plagnol said, adding that minutes due later on Tuesday of the Federal Reserve's last interest rate-setting meeting were likely to indicate that the central bank is set to stick to its wait-and-see attitude. At 1100 GMT, U.S. stock futures were pointing to opening gains of around 0.1 percent for the three main indexes SPc1 DJc1 NDc1. On Monday, the Dow Jones industrial average .DJI rose 0.19 percent to close at 12,131.88 and the Standard & Poor's 500 Index .SPX edged up 0.25 percent to 1,384.42, while the Nasdaq Composite Index .IXIC ended up 0.70 percent at 2,406.38. Retailers will hog the limelight as home improvement chain Home Depot ( HD.N ), office supplies seller Staples ( SPLS.O ), discount chain Target ( TGT.N ) and Wal-Mart Stores ( WMT.N ) report, while the auto sector will also be in focus as President George W. Bush meets executives from Ford Motor Co. ( F.N ), General Motors Corp. ( GM.N ) and Chrysler. Home Depot reported a lower quarterly profit that missed analysts' estimates as consumers backed away from big-ticket purchases amid the U.S. housing slowdown. Interest rate-wary investors will also follow comments by the presidents of the Federal Reserve Banks of St. Louis and San Francisco, as well as Wednesday's publication of minutes from the Fed's policy-setting meeting of October 24-25. On the corporate front, mergers and acquisitions could give markets a shot in the arm. Bootmaker Timberland TBL.N is exploring a plan to sell itself, the Wall Street Journal reported, citing people familiar with the matter. It said Timberland, valued at nearly $2 billion, had hired Goldman Sachs ( GS.N ) to help run the process. El Al Israel Airlines ( ELAL.TA ) canceled its option to buy eight to 10 new Boeing ( BA.N ) 787 jets, Israel's Yedioth Ahronoth daily reported.

Internet ad revenue rises to $4.2 billion in 3rd quarter. A report compiled by the Interactive Advertising Bureau and PricewaterhouseCoopers showed Web advertising rose 2 percent compared with the second quarter of 2006, even as the dollar amount spent was the largest ever for a single quarter. Investor concerns over slower growth rates even as more advertisers are spending money on the Web have weighed on Internet leaders like Yahoo Inc. and others. Internet media companies have responded by seeking higher-growth avenues on the Web, from social networking capabilities to new services created with traditional media, while still working to grow their base of marketers. "This growth follows the trend of where consumers are spending their media time and the unique ability of interactive advertising to effectively target and monitor ad campaigns," said David Silverman, a partner at PwC.

Street-topping Wal-Mart upbeat on holiday. The world's biggest retailer gave a fourth-quarter profit forecast that was at or below Wall Street expectations but said recent price cuts on items such as toys and electronics were already drawing shoppers. "They definitely threw down the gauntlet with their comments on aggressive pricing," said Sarah Henry, an analyst with Sovereign Asset Management, which owns Wal-Mart shares. Net income rose to $2.65 billion, or 63 cents per share, in the third quarter that ended October 31, from $2.37 billion, or 57 cents per share, a year earlier. Results in the latest period include a 1-cent-per-share insurance gain related to last year's hurricanes. Analysts, on average, expected earnings of 60 cents per share, according to Reuters Estimates. Wal-Mart said on October 5 that profit would probably be in the range of 59 cents to 63 cents per share. Sales rose 12 percent to $83.54 billion, with international sales up nearly 34 percent, helped by acquisitions. Wal-Mart posted lackluster sales growth at its U.S. stores open at least a year, hurt by disruptions from store remodeling efforts and a poor reception for its trendier clothing. Chief Executive Officer Lee Scott said third-quarter U.S. sales were softer than planned, but holiday season price cuts should boost fourth-quarter demand. "This season, no one will doubt Wal-Mart's leadership on price and value," he said. BACK TO BASICS Joseph Beaulieu, an analyst with Morningstar, said Wal-Mart's refound focus on cutting prices was a positive after a year of talking about adding higher-end merchandise to get wealthier customers to buy more than just food. "Wal-Mart is...getting back to what's made them work in the past," he said. "The way they're toning down the talk about fashion and talking more about discounting, that's the kind of thing that makes that store tick." The retailer forecast fourth-quarter earnings from continuing operations of 88 cents to 92 cents a share. Analysts on average expected 92 cents, according to Reuters Estimates. On a recorded message detailing third-quarter results and fourth-quarter plans, Scott said specials such as a $398 laptop computer sold out quickly, and he vowed the "most aggressive pricing strategy ever" for the holiday season. Wal-Mart's closest rival, Target Corp. ( TGT.N ), posted a strong 16 percent jump in quarterly profit on Tuesday, and called Wal-Mart's cost-cutting efforts "business as usual." Beaulieu said Target is somewhat sheltered from Wal-Mart's aggressive holiday discounts because their stores cater to wealthier shoppers and are concentrated in the U.S. north rather than Wal-Mart's power zone in the south. "I think Target can do well in a quarter that Wal-Mart does well," he said. "In a quarter when Wal-Mart and Target both do really well, other retailers could get hurt." Wal-Mart expects fourth-quarter sales at its U.S. stores open at least a year to be up 1 percent to 2 percent. Wal-Mart had previously forecast flat same-store sales for November, so the quarterly forecast suggests stronger growth in December and January. In the third quarter, the U.S. discount stores posted 7.8 percent total sales growth, with operating income up 9.9 percent. Sam's Club sales were up just 1.9 percent, hurt by falling prices for gasoline sold at its filling stations, while operating income rose 4.1 percent. The international division posted an 18.1 percent jump in operating income for the quarter. Shares of the Bentonville, Arkansas-based company rose $1.21, or 2.6 percent, to $47.53 in morning New York Stock Exchange trading. The stock is up slightly year-to-date and trades at 14.4 times analysts' profit forecasts for next year, compared with a multiple of 16.3 for Target.

VW brand chief considers resigning: report. Quoting company sources, business daily Handelsblatt said Bernhard had already in May threatened internally to resign if Winterkorn became chief executive. Volkswagen last week appointed Winterkorn, the head of the Audi ( NSUG.DE ) premium division, as new CEO, replacing Bernd Pischetsrieder, who will resign at the end of the year. The paper said Volkswagen's supervisory board would like to keep Bernhard but that relations between him and Winterkorn were cool. The firm declined to comment on the report. Chosen by Pischetsrieder to head the VW brand, Bernhard has been at the forefront of VW's campaign to slash costs and jobs at the group's troubled western German operations. Bernhard is responsible for delivering 7 billion euros ($9 billion) in gross earnings improvements at the VW brand by 2008, and has aggressively looked to prune benefits and extend working hours for the roughly 100,000 workers at the six traditional VW plants in western Germany.

Home Depot cuts outlook amid housing downturn. The world's largest home improvement retailer said weakness would likely continue into 2007, and its shares fell 1 percent. "I don't think we've seen the bottom yet," Home Depot Chairman Robert Nardelli said during a conference call. "I don't see anything that suggests it's going to get significantly better in '07." Earnings fell to $1.49 billion, or 73 cents a share, for the third quarter ended October 29, from $1.54 billion, or 72 cents a share, a year earlier. It was Home Depot's first decline in quarterly profit since the fourth quarter of 2002. Analysts, on average, expected profit of 75 cents a share, according to Reuters Estimates. Per-share results were helped by lower shares outstanding in the latest period as Home Depot bought back stock. Total sales rose 11.3 percent to $23.1 billion, falling short of analysts' average estimate of $23.3 billion. Sales at stores open at least a year, an important retail measure, fell 5.1 percent. "Home Depot is in a very challenging position," Credit Suisse analyst Gary Balter said in a research note, adding that results point to lower customer traffic. Home Depot, which is competing fiercely for consumer dollars with smaller rival Lowe's Cos. ( LOW.N ), said a slowing U.S. economy, declining home sales and falling home prices hurt its retail division, where total sales rose just 1.1 percent to $19.7 billion. Other key metrics weakened. The average purchase fell 1 percent to $58.33, the first decline in four years, while average weekly sales per store fell 7 percent. Home Depot cited softness in most departments and said consumers were taking on fewer costly improvements such as kitchen renovations and flooring projects. In the Home Depot Supply segment that caters to home builders and other contractors, sales more than doubled to $3.5 billion, helped by acquisitions. HOME SALES WEAKEN Atlanta-based Home Depot and Lowe's have both cut their outlook this year as higher borrowing costs and weaker U.S. home sales cooled big-ticket purchases. In September, existing home sales slowed for the sixth straight month, and new home sales were off 14 percent from year-earlier levels, according to government and housing industry reports. Home Depot said per-share profit could fall as much as 16 percent in the fourth quarter. As Lowe's enters big U.S. cities, Home Depot has invested in new products, technology and service to defend its market share, including plans to spend $350 million in the second half of this year to add staff and improve store appearance. "It appears that the company is aware of its shortcomings on the retail side," said Peter Jankovskis, director of research at Oakbrook Investments in Lisle, Illinois. Home Depot pared its growth forecast, saying it now expects per-share profit to rise 4 percent to 5 percent for the current fiscal year, while sales would increase about 12 percent. The company had previously said full-year results would come in at the low end of projections of a 10 percent to 14 percent increase in per-share earnings and a 14 percent to 17 percent rise in sales. Home Depot shares eased 38 cents to $36.02 on the New York Stock Exchange, while Lowe's was off 2 cents at $28.98. Analyst had largely expected the weaker quarterly results. Home Depot's stock has fallen about 11 percent this year, while Lowe's is off 13 percent.

Target beats forecasts, confident about holidays. The discount retailer, whose shares edged higher in morning trade, posted strong sales growth and hefty returns from its credit cards, and said it would likely meet Wall Street's expectations for fourth-quarter profits. Wal-Mart, the world's biggest retailer, has cut prices on key toys, electronics and small appliances, and vowed to be "relentless" in holiday season discounting. Gregg Steinhafel, Target's president, called Wal-Mart's markdowns "business as usual" and said his company would respond aggressively. "As we get deeper in the holiday season, we expect to experience more price cutting and then we will respond as quickly as we possibly can to make sure our prices are in line," he said on a conference call with analysts. Target earned $506 million, or 59 cents per share, in the third quarter ended on October 28, up from $435 million, or 49 cents per share, a year earlier. Analysts on average expected 55 cents a share, according to Reuters Estimates. Quarterly revenue rose 11.2 percent to $13.57 billion, with sales at stores open at least a year -- a key retail measure known as same-store sales -- up 4.6 percent. Earlier on Tuesday, Wal-Mart posted an 11.5 percent increase in profit, with U.S. same-store sales up 1.5 percent. CREDIT CARDS Target's sales growth has outpaced Wal-Mart's in recent quarters, in part because Target caters to wealthier shoppers who are less sensitive to economic factors such as rising energy costs. Target said its credit card business had contributed $176 million to earnings before taxes, up 63 percent from a year earlier. The retailer issues its owns Target and Target Visa credit cards, which have been big profit drivers. Lehman Brothers analyst Robert Drbul said the credit card earnings were better than he had expected. On the conference call, Target said credit delinquencies and write-offs had increased as expected after a recent regulation that increased minimum payments, but said delinquencies were likely at or near their peak. The retailer said fourth-quarter earnings would likely be in line with Wall Street expectations for $1.26 per share, with same-store sales growth in the mid-single digits. Shares of Target were up 28 cents, or 0.5 percent, at $58.04 in morning trading on the New York Stock Exchange, while shares of Wal-Mart were up 2.3 percent to $47.40. Target shares, which are up about 5 percent for the year to date, trade at 16.3 times analysts' profit forecasts for next year, compared with a multiple of 14.4 for Wal-Mart.

Countrywide says housing slump has a year to go. Mortgage lending has slowed as rising inventories in the housing market led to a "hard landing" for the industry after a decade of strong growth, Countrywide Financial Corp. CFC.N CEO Angelo Mozilo said at a Merrill Lynch & Co. conference in New York. "We have another year of adjustment, or transition" in the industry until consumers believe home prices won't decline, Mozilo said. "Various events will make the change take place and one of them is" a decline in available homes, he said. Mozilo said he expects the industry will see lending volume grow progressively from 2008 to 2010 because of a build-up of demand. Until then, the industry will continue to consolidate and eliminate excess capacities. Calabasas, California-based Countrywide last week said it has funded $375 billion in residential mortgage loans in the year through October, down 7 percent from the same period of 2005. Its pipeline of mortgages that haven't yet closed totaled $61 billion in October, down 14 percent from a year earlier. Countrywide has also said it would trim more than $500 million of annual costs by year end, in part by firing more than 2,500 employees.

Internet ad potential underestimated: Yahoo CEO. In a speech in London, Semel said predictions for online advertising had only covered graphical and search advertising. "Video as you all know will become a major factor on the Internet," he told the Internet Advertising Bureau Engage 2006 conference. "It will be everpresent throughout the Internet and it will find its proper way to advertise. "So whether it's mobile or whether it's video or whether it's more and more community (social networking sites), these factors have not gone into those numbers, so we think the actual growth potential of advertising online is really being understated." He said sponsorship, different forms of advertising and more innovative and clever ways to integrate advertising with video online would all develop quickly. Media buying and planning firm ZenithOptimedia has said the Internet will receive a greater share of global advertising spending this year than outdoor outlets such as billboards, and it is set to overtake radio soon.

Wal-Mart further cuts toy prices. Previously the company had reduced prices in categories including electronics and home appliances in the face of sluggish sales. Earlier in the day, the world's largest retailer posted a 11.5 percent rise in net income and Chief Executive Lee Scott vowed that the company's "most aggressive pricing strategy ever" would revive sales during the holiday. Wal-Mart shares rose as much as 4 percent to $48.20 on the New York Stock Exchange. Wal-Mart, which said the latest markdowns bring the total number of discounted toys to over 150, has been trying to reinvigorate growth after back-to-back months of disappointing sales. The company's more fashionable apparel line Metro 7 has not been a hit with shoppers, while remodeling projects have disrupted hundreds of U.S. stores. The company first said in October that it would lower prices on more than 100 key toys, such as Mattel Inc.'s MAT.N Hot Wheels Radar Gun at $20, down from $29.74, and the Monopoly Here & Now board game from Hasbro Inc. HAS.N, which will sell for $15 instead of $28.96. Earlier this month, Wal-Mart also announced price cuts on electronics such as plasma televisions and digital cameras, appliances such as microwaves and coffee makers, and a holiday clothing collection from Metro 7. On Tuesday, Wal-Mart said in a statement that it will continue to match competitors' prices on toys through December 31. Newly discounted toys include the Bratz Kids doll, marked down to $8.88 from $12.94, and the Superman Inflato Suit, reduced to $15 from $22.68. Shares of Wal-Mart were up $1.36, or almost 3 percent, or $47.68 in late-afternoon trading.

Ford restates results for 5 years, narrows Q3 loss. The restated results are for 2001-2005, the company said in a regulatory filing with the U.S. Securities and Exchange Commission. For the third quarter of 2006, the company reported a net loss of $5.25 billion, an improvement of about $550 million from the preliminary results released on October 23. For the first nine months of 2006, Ford recorded an improvement of $250 million, reducing its loss to $7 billion. "The headline number is a positive, but if you look at recent years, they were not as good as originally reported," Argus Research analyst Kevin Tynan said. "I think that is an indication that this is a company that is still facing a lot of challenges." Ford will be filing amended 10-Qs for the first and second quarters of 2006 on or by November 20, Ford spokeswoman Becky Sanch said, adding the company's cash position was not affected. The restatements added, in total, about $850 million to net income through the third quarter of 2006, she said. Tynan said the numbers show that Ford's initial turnaround plan, announced in 2002, did not have the traction that was originally reported. "It's a company that is struggling and those numbers indicate it," he said. Ford Chief Financial Officer Don Leclair told analysts and reporters that the automaker should be profitable in its North American unit in 2009, but cost-reduction efforts would continue beyond that year. "That is a way of life for us," he said, referring to cost cuts. Leclair also said the company has made certain assumptions on the 2007 labor negotiations with the United Auto Workers union while compiling its outlook, but he declined to give details. CHANGES FROM 2001 TO 2005 The accounting changes that triggered the restatements involved the use of derivatives by Ford's finance arm. Ford said the restatements bring its financial reporting up to date with the SEC. The company said it also identified adjustments that should have been recorded in periods earlier than 2001 but decided these to be immaterial to the originally filed financial statements, and recognized the adjustments as "out-of-period." In the restatement, Ford narrowed its 2001 net loss to $4.8 billion from a previously reported loss of $5.45 billion. For 2002, it reported a profit of $900 million instead of a loss of $1 billion. Net income for 2003, 2004 and 2005 was reduced by $300 million, $500 million and $600 million, respectively, Ford said. The restated net income for 2003, 2004 and 2005 were $200 million, $3 billion and $1.4 billion. Last month, Ford reported a $5.8 billion third-quarter preliminary net loss -- its biggest in 14 years -- and predicted fourth-quarter operating losses and significant cash drain in the "near to medium term." The company said it was exploring various financing strategies, including secured financing involving a substantial portion of its automotive operations to raise cash. Leclair said the company is close to arranging a secured financing deal, but declined to reveal the value of the deal. Ford shares were down 11 cents, or 1.24 percent, at $8.76 in noon trading on the New York Stock Exchange. (Additional reporting by Jui Chakravorty )

APEC business leaders urge vast free trade zone. The APEC Business Advisory Council (ABAC) also urged leaders of the 21 Pacific rim economies meeting in Hanoi to take stronger steps to curb trade in pirated goods and develop better plans to deal with pandemics such as bird flu. At their annual meeting ahead of the Asia Pacific Economic Cooperation (APEC) summit this weekend, the business council noted that bilateral and regional trade pacts have blossomed in recent years, while a vast APEC-wide zone had yet to get off the drawing board. "ABAC strongly urges leaders to develop an APEC initiative to promote convergence and consolidation among existing agreements, and those currently being negotiated," the group said in a report prepared for the leaders' summit. At least 50 free trade pacts have been agreed or are under discussion among countries represented at APEC, experts say. APEC says its 21 members account for nearly half of global trade, 40 percent of the world's population and 56 percent of the world's gross domestic product. REVIVE DOHA ROUND If not dormant, progress toward APEC's dream FTA has been glacial, as encapsulated by the title of the declaration for this year's meeting: "The Hanoi Plan of Action on the Pusan Roadmap toward the Bogor goals". Last year's APEC meeting was in Pusan, South Korea and an Asia-Pacific free trade area was first envisioned at the 1994 meeting in Bogor, Indonesia. Nevertheless, a top U.S. trade official said the so-called Free Trade Area of the Asia Pacific is "an interesting idea" that merits serious discussions in Hanoi. And while it remains too early to say what will come out of this week's talks, the United States wants a strong APEC statement to "help reinvigorate the Doha round," Deputy U.S. Trade Representative Karan Bhatia told Reuters in Washington. Some trade experts believe APEC leaders could give a much-needed jolt to the nearly dead Doha round of world trade talks by promoting a regional free trade zone. That could also help businesses facing a growing web of smaller pacts in the region, often with conflicting rules. "FTAs offer opportunities to liberalize trade, but there are concerns about spaghetti bowl issues of compatability and the costs when you have lots of agreements to keep track of," APEC official Scott Smith told Reuters on the sidelines of the business leaders' meeting. ABAC, comprising three top business people from each APEC economy, also urged leaders to renew efforts to revive the Doha round of global trade talks, which collapsed in July. The global trade round was a "once in a generation opportunity to make progress on trade liberalization and must end in a positive outcome for the world trading community", the ABAC report said. The business leaders said that while considerable progress had been made in intellectual property protection, "traffic in counterfeit products continues to grow faster than the trade in legitimate products". The council saw a "critical need for more information about avian influenza", to help the Asia-Pacific business community "prepare continuity plans for the possibility of a future health pandemic". Vietnam's President Nguyen Minh Triet told the opening session of ABAC that Asia-Pacific economies had achieved above average growth rates despite an unstable oil market. "That shows the liberalization of trade and investment is indeed stimulation for promoting development and bringing in prosperity for the entire APEC region in general, and each economy in particular."

Eddie Bauer profit, sales fall. The loss widened to $197.6 million, or $6.58 per share, compared with a loss of $10 million, or 33 cents per share, a year earlier. Sales dropped about 3 percent to $211.3 million, and comparable-store sales declined 1.5 percent. It was the company's first quarterly results since a massive restructuring. Eddie Bauer has struggled to revive a brand that traces its roots back to 1920. The company is best known for outdoor-inspired clothing and accessories, but it has also licensed its name for products ranging from Ford Explorer trucks to baby strollers. The retailer operates some 375 stores, but analysts say it has had trouble setting itself apart from similar companies such as L.L. Bean and Sears Holdings Corp.'s ( SHLD.O ) Lands' End. In the proposed takeover, a company owned by affiliates of Sun Capital Partners Inc. and Golden Gate Capital will pay Eddie Bauer stockholders $9.25 per share. They will also assume $328 million of Eddie Bauer debt. (Additional reporting by Anthony Kurian in Bangalore)

Individual investors flock to booming China shares. "I like to come here every day. I regard this as my new office," said Madame Zhou, who retired two years ago and has recently put 20,000 yuan ($2,545) in the stock market, roughly the annual disposable income of an average Shanghai resident. Zhou, who knits when no fast-rising stock takes her fancy, is part of a major shift in China's financial world -- the return of individual investors to the equity market. After deserting the market during a four-year slump that halved the benchmark Shanghai index .SSEC , ordinary Chinese -- from retirees to office and factory workers, small businessmen and students -- are once again putting their savings into stocks. They are being lured by a strong market rally, aggressive advertising by an expanding fund management industry, and the government's decision in May to encourage China's top firms to list domestically instead of focusing on foreign bourses. Creating an "equity culture" in China has become an important part of economic policy. Officials publicly tout the market's prospects and praise reforms to boost corporate transparency and cut the influence of parasitic state shareholders on companies. More money in stocks helps wean firms off excessive reliance on bank loans, reducing risk in the financial sector. It is also helping to deflate a speculative property bubble in some cities such as Shanghai, as funds flow from real estate to equities. "People of my generation believe Chairman Mao's saying: listen to the Party. So I think now is a good time to buy," said Lao Zhu, who trades in a plush VIP room reserved for wealthy individual investors at Guotai Junan Securities. Zhu started investing in stocks several months ago, selling a house that he had been renting out and plowing 1 million yuan ($125,000) of the proceeds into equities. "I believe the government aims to help the stock market again, in the same way as it boosted the property market several years ago," he said. More than 2 million investors, almost all individuals, joined the equity market in the five months through the end of September, bringing the total to 76 million, the China Securities Regulatory Commission said. In the previous five-month period, the number of investors dropped by 861,800. October money supply data released on Monday showed individual savings deposits at banks fell by 7.6 billion yuan from the previous month. It was the first drop since June 2001, and analysts believe a major reason was that people were taking money out of banks to invest in stocks. A key event that boosted individuals' confidence was the smooth listing in Shanghai late last month of the country's biggest bank, Industrial and Commercial Bank of China ( 601398.SS )( 1398.HK ), which raised over $5 billion in the domestic market's largest-ever share offering. Company officials and advertising by mutual funds have successfully portrayed the domestic listings of ICBC and other blue chips as chances for ordinary Chinese to share in the profits of the country's economic miracle for the first time. The flood of individual investors' money, combined with fresh funds from local institutions and foreigners, has helped push the Shanghai index up 60 percent so far this year. The index, which ended on Tuesday at 1,888 points, now appears within striking distance of its record high of 2,245, hit in June 2001. That is next year's target for many individual investors. Analysts estimate individuals account for some 70 percent of daily turnover, which has doubled from levels early this year -- though the proportion has not grown significantly since institutions and foreign investors are also more active. Although growth in individual investment has been explosive, the experience of other countries suggests it may still have a long way to run in coming years. China's 76 million stock investors in September were only about 5 percent of the population. In the United States, over 40 percent of households own shares. Some analysts believe, however, that the road to a shareholding culture may not be a smooth one. Though they agree the stock market's regulatory framework is stronger and the number and quality of its blue chips greater than ever before, they note that the bull-run up to June 2001, which ended in tears after valuations rose too high, was also accompanied by government efforts to talk up the market. "There's a saying in the Chinese stock market: when even the old ladies selling newspapers outside the trading floor start to buy stocks, then it's the end of the bull run," said Zhang Qi, analyst at Haitong Securities.

Berkshire cuts Ameriprise stake. Berkshire and its subsidiaries owned 14.72 million shares of Minneapolis-based Ameriprise as of October 31, down from 23.92 million shares as of March 29, according to the filing. Ameriprise spokesman Paul Johnson declined to comment. American Express Co. ( AXP.N ), the credit card and travel services company, spun off Ameriprise in September 2005 in the form of a tax-free dividend to shareholders. Omaha, Nebraska-based Berkshire had a 12.2 percent Ameriprise stake following the spinoff. After it sold one-fifth of this investment, it said it expected to retain the remaining 9.8 percent stake "for the foreseeable future."

WRAPUP 1-U.S. Oct producer prices, retail sales down. The Labor Department's Producer Price Index (PPI) thatmeasures prices at the factory and farm level dropped 1.6percent, matching a record fall in October 2001 and was threetimes the decline Wall Street analysts had predicted. Core producer prices that exclude food and energy fell 0.9percent, the biggest decline since a 1.2 percent fall in August1993. "These numbers are the latest indication that the U.S.economy is slowing and that inflation is in fact,decelerating," said Mark Meadows, a currency strategist withTempus Consulting in Washington. Bond prices rose on the signs of reduced inflationarypressures in the PPI report while stocks opened higher as somekey retailers reported higher earnings that bolstered hopes forthe holiday spending outlook. Prices in futures markets showed investors still believeU.S. Federal Reserve policy-makers will keep rates steady attheir final policy session for this year in December. Butchances for a cut in January rose to 6 percent from zero andprospects for a March cut rose to 30 percent from 22 percentlate on Monday. Falling new-car and truck prices also were a significantfactor pushing down producer prices. Light-truck prices droppeda record 9.7 percent in October after rising 3.5 percent inSeptember while passenger car prices fell 2.3 percent after a2.8 percent gain in September. Department officials said that excluding car and truckprices, October core producer prices were up a slight 0.1percent. RETAIL SALES The Commerce Department said overall retail sales fell 0.2percent in October on top of a 0.8 percent drop in September. Last month's drop was not as steep as the 0.4 percentdecline analysts had predicted, primarily because new-car salesthat account for a significant part of monthly sales climbed0.6 percent following a revised 0.7 percent gain in September. The Commerce Department said that if sales of new cars andparts were stripped out, October retail sales fell 0.4 percent-- somewhat steeper than the 0.2 percent analysts hadforecast. But analysts said it did not appear that consumers werethrowing in the towel on spending and said that was anencouraging sign. "In general, when we're looking at the macro picture, youwant to know how is the consumer doing, and excluding gasolinepurchases, it's a fairly good number," said Richard Sichel,chief investment officer with Philadelphia Trust. A separate and more current survey of U.S. chain-storesales, the Johnson Redbook Index, showed sales in the weekended Nov. 11 rose 3.3 percent on a year-over-year basis. Thatwas just slightly below the prior week's 3.4 percent rise. A similar survey by the International Council of ShoppingCenters and UBS Securities found chain store sales rose 2.1percent in the Nov. 11 week year-on-year. The Labor department said energy prices fell 5 percent inOctober on top of September's 8.4 percent decline. Natural gasprices for home heating were down a record 9.3 percent lastmonth. The department said prices for light trucks plunged arecord 9.7 percent in October after rising 3.5 percent inSeptember. It was the largest fall since records were startedin 1964. Passenger car prices were down 2.3 percent last monthfollowing a 2.8 percent gain in September.

Google closes YouTube deal. In a statement, Mountain View, California-based Google said it had issued 3,217,560 shares to pay for YouTube. It also paid restricted stock units, options and a warrant that can be converted into 442,210 shares of Google's common stock. The $1.65 billion stock deal included around $15 million in funding which Google provided to YouTube between signing the deal in early October and closing the deal this month. One-eighth of the equity, or roughly $200 million, will be held in escrow as security on certain unspecified indemnification obligations, the Google statement said. YouTube has enjoyed explosive growth over the past year and in the process, pioneered a new grassroots online video star-making system, as Web viewers seek out short-form comic sketches created by other users. San Bruno, California-based YouTube says it serves up more than 100 million videos a day. But its popularity has also been fueled by the widespread availability of copyrighted TV episodes and music videos for which media companies say they should be compensated. Media industry sources in recent weeks have said that some portion of the price paid by Google would be reserved to settle potential copyright infringement suits aimed at YouTube. Meanwhile, Google and YouTube have said they are racing to strike deals with video producers that would allow them to share in revenue when such programming appears on YouTube. YouTube Co-founder and Chief Executive Chad Hurley said that Google's backing will provide his company with the flexibility to continue to offer innovative services, but also emphasized that the company would remain independent. "In the coming months, we will roll out many new exciting features and programs," Hurley said. "The community will remain the most important part of YouTube and we are staying on the same course we set out on nearly one year ago." Speaking at a Stanford University conference on Saturday, Google Chief Executive Eric Schmidt was asked whether the YouTube deal was evidence of a new stock market bubble comparable to the late 1990s dot-com era. Schmidt said he sees no replay as YouTube is the only one of the new generation of Internet sites to be acquired for more than $1 billion, and that none of the latest crop of sites have held the dramatic initial public offerings of the dot-com era. "If there is a new bubble I don't think a single acquisition is a talisman of that," Schmidt told the audience of business school students. "Before you call it a bubble why don't you look for a trend?" (Additional reporting by Michael Flaherty in New York)

Retailers warily eye Wal-Mart's holiday cuts. Wal-Mart, whose shares rose 2 percent in morning trading, said it would implement its "most aggressive pricing strategy ever" for the key holiday shopping season. The retailer said it expects fourth-quarter sales at stores open at least a year to be up 1 percent to 2 percent and that price cuts on items like toys and electronics were already drawing shoppers. While Wal-Mart's plans could generate sharply higher traffic, other retailers' shares suffered on Tuesday as the prospect of having to compete against deep discounts from the leading retailer spread little cheer throughout the sector. For example, consumer electronics retailers, who stand to lose sales of hot items such as flat-panel televisions to Wal-Mart, saw their shares fall. Circuit City stock fell 4.4 percent to $23.79 on the New York Stock Exchange while shares of Best Buy Co. Inc. ( BBY.N ) and RadioShack Corp. ( RSH.N ) each slipped less than 1 percent to $52.21 and $17.22, respectively. Tom Schoewe, Wal-Mart's chief financial officer, said consumers were still concerned about energy prices, even though gasoline costs have come down from a late-summer peak, and a sluggish housing market. "At the end of the day, our customer is looking for value," he said. "That's what is going to make or break our fourth quarter." Joseph Beaulieu, an analyst with Morningstar, said Wal-Mart's focus on cutting prices was a positive. "Wal-Mart is ... getting back to what's made them work in the past," he said. "The way they're toning down the talk about fashion and talking more about discounting, that's the kind of thing that makes that store tick." He said Target, whose profit beat Wall Street estimates due to strong performances from its Target and Target Visa credit cards, was somewhat sheltered from the need to match Wal-Mart's discounts because their stores cater to wealthier shoppers and are concentrated in the northern United States rather than the South. "I think Target can do well in a quarter that Wal-Mart does well," he said. "In a quarter when Wal-Mart and Target both do really well, other retailers could get hurt." Wal-Mart shares, which are roughly flat year-to-date, rose 96 cents to $47.28 while Target rose nearly 1 percent to $58.09. (Additional reporting by Emily Kaiser in Chicago and Nicole Maestri in New York)

Timberland may put itself up for sale: source. Timberland, whose shares were up 5.4 percent, has hired Goldman Sachs Group ( GS.N ) as its financial adviser, the source said. Timberland, which has a market capitalization of nearly $2 billion, and Goldman Sachs declined to comment on the matter. "The stock isn't necessarily cheap, so I don't know what that may mean for any prospective buyers, if there are out there," said Susquehanna Financial analyst Chris Svezia, who has a "neutral" rating on Timberland shares. "Even though the company has put out somewhat mixed results for the past quarter or so, the stock has moved up pretty appreciably," Svezia added. Any deal would need the approval of the Swartz family, which founded Timberland and controls all of its Class B shares, giving the family about 70 percent voting power. Statham, New Hampshire-based Timberland, whose fashion-oriented work boots have long been popular with young, urban consumers, has struggled recently as fashion trends have favored high-priced basketball shoes or low-cut European styles over boots. Timberland posted a 25 percent drop in profit for the third quarter. Its stock, which trades at 18.3 times expected 2007 earnings, has risen 14.7 percent since November 7 and is up nearly 33 percent from a 52-week low of $24.80 on July 21. The shares were up $1.68 to $32.68 in midday trade on the New York Stock Exchange.

Automakers say need action on weak yen. "We told the president that we are very willing to make difficult decisions to transform our businesses to compete successfully, but we are not in a position to counter the effects of an excessively weak yen. "We asked the president to take action to address the weak yen," the companies said in a joint statement issued after the meeting.

Buffett's Berkshire adds to Lowe's, Nike stakes. In a regulatory filing, Berkshire said it owned 7 million shares of Lowe's, the home improvement retailer, on September 30, up from 390,000 on June 30. It also said it owned 4 million shares of footwear specialist Nike, up from 2.47 million. Berkshire also reported a 36.42 million share stake in Budweiser brewer Anheuser-Busch, down from 43.53 million in June. It also reported a 745,700 share Target stake, compared with 5.5 million shares in June. Regulators sometimes let Berkshire delay disclosing some of its buying and selling so investors cannot copy it, and have done so in the past with respect to the Target stake. Berkshire reported owning $49.66 billion of stock as of September 30. Among other changes in the third quarter, Berkshire said it cut its stake in tax preparer H&R Block Inc. ( HRB.N ) to 10.97 million shares from 11.39 million, and raised its stake in records management company Iron Mountain Inc. ( IRM.N ) to 6.03 million shares from 5.02 million. It also confirmed it has more than doubled its stake in building products company USG Corp. ( USG.N ), to 16.7 million shares from 6.5 million. In addition, Berkshire reported a 10 million share stake in Western Union Co. ( WU.N ), which was recently spun off from another Berkshire holding, First Data Corp. FDC.N. Buffett, the world's second-richest person behind Microsoft's Bill Gates, generally favors investing in companies with stable, easy-to-understand businesses that are industry leaders, and whose shares appear undervalued.

InterOil says finds big gas reserves in PNG. Chief Executive Phil Mulacek told Reuters the Elk-1 field, would be developed for a US$3 billion liquefied natural gas (LNG) joint venture between InterOil, Merrill Lynch Commodities (Europe) Ltd. and private equity group Clarion Finanz AG. "Third parties have said that the flow of the Elk-1 well is bigger than anything they have seen in North West Shelf," Mulacek said in a phone interview. "The indicative tests show that it field has at least 4 trillion cubic feet of gas and could underpin an LNG development." "So far, all tests results show that this could potentially be the biggest discovery in the history of Papua New Guinea," he said. While analysts in Canada said the discovery is promising, it is too soon to say if the Elk-1 find would be similar in size to recent discoveries such as Woodside Petroleum's Ltd. WPT.AX Pluto field in Australia, which has 4.1 trillion cubic feet of gas. Papua New Guinea's proven gas reserves are over 15 trillion cubic feet. "The (reserve) thickness is very, very encouraging, the pressure is abnormally high, and probably double what you would expect for a discovery this deep," said Rob Moss, oil and gas analyst at Acumen Capital Partners in Calgary. "To suggest there could be several trillion cubic feet, given the information currently available, is perhaps a little opportunistic," Moss said. SHARES SOAR News of the find sent InterOil's shares soaring on the Toronto Stock Exchange. The stock hit an intraday high of C$28.99 and closed 23.6 percent higher at C$27.93. The stock has advanced nearly 60 percent over the past six months. "You can make projections and show possibilities, but I think it's way too early to quantify what kind of find is in the ground," said Ira Zadikow, analyst at Great Eastern Securities. "It definitely increases the assets of InterOil, but if they don't have a way of distributing it, or transporting it, or marketing it -- it doesn't do a thing for its revenues." Mulacek said the company will drill more wells on the Elk field and at nearby prospects to determine the size of the discovery. The final results of the appraisal are expected to be released in the first half of 2007 and first deliveries are scheduled for early 2012, InterOil said. A company drilling update on Monday said preliminary tests showed the field recording a gas flow of 21.7 million standard cubic feet per day at a flowing bottom hole pressure of 3,590 psi. The hole is 1,624 meters deep. Mulacek added that preliminary tests indicate that there could also be a layer of oil under the gas and condensates. Marketing of the LNG will be mainly handled by Merrill Lynch, which is supplying gas to customers in the United States, where it has access to pipelines and a LNG import terminal in Louisiana. The LNG project will also be targeting customers in Australia and North Asia, he said. InterOil, Merrill Lynch and Clarion Finanz each have about 30 percent stake in the joint venture. InterOil is expected to report its third-quarter earnings results after the Canadian market closes on Tuesday. ($1=1.139 Canadian Dollar) (Additional reporting by Jonathan Spicer in Canada)

Japan July-September GDP growth tops forecasts. The stock market benchmark rose more than 1.5 percent as the growth data cheered traders who were worried about a slowdown, but the government remained cautious on the economic outlook, pointing to sluggish consumption. Cabinet ministers also said they wanted the BOJ to support the economy through monetary policy -- a stance they have stated often in the past. Gross domestic product, the broadest measure of the economy, rose 0.5 percent in the three months to September, government data showed, beating market expectations of a 0.2 percent rise. On an annualized basis, the economy grew 2.0 percent in July-September, double the pace the market was expecting. It was the seventh straight quarter of expansion and also exceeded the 1.6 percent growth in the United States in the same quarter. "The data showed the economy continued to expand, moving toward steady growth, although the growth seemed to be led by foreign demand," said Yasuhiro Onakado, chief economist at Daiwa SB Investments. "The chance of a rate increase by the BOJ in January or February is large unless we get surprisingly poor data in production," he said. BOJ RATE HIKE The data surprised financial markets, which had feared the data could show a contraction in the economy. The Nikkei share average .N225 rose 1.67 percent, its biggest one-day gain in six weeks, while the yen rose to around 117.40 yen JPY= per dollar from 118.05. Japanese bond yields soared, with the two-year yield briefly rising 9.5 basis points to a three-month high of 0.825 percent JP2YTN=JBTC, as investors grew nervous about the possibility the BOJ could raise rates as early as December. The central bank has said it will raise interest rates gradually in the future after hiking them in July for the first time in six years to 0.25 percent from zero. While the BOJ is expected to keep rates on hold at its policy meeting later this week, many investors think the bank could bump rates up in December or January. "I think the chances of a rate hike in December are getting high," said Kikuko Takeda, a market economist at Bank of Tokyo-Mitsubishi UFJ. "Not only that, markets may start to think that the BOJ may raise rates once more after that next year." WEAK CONSUMPTION But Economics Minister Hiroko Ota said she wanted the BOJ to support the economy through monetary policy, echoing similar comments from Finance Minister Koji Omi. Some economists also said the GDP data may not be as strong as it first appears, because growth was propelled solely by exports and capital spending while domestic consumption was weak. Private consumption, which accounts for some 55 percent of Japan's GDP, declined 0.7 percent in the July-September quarter. Making up for the slump in consumption, capital expenditures grew 2.9 percent, well above the market consensus for a 0.7 percent rise. Exports grew 2.7 percent on the back of strong overseas demand, helped in part by a cheaper yen. Economics Minister Ota also raised the alarm about consumption, saying its sluggishness may not be due entirely to technical, one-off factors, such as bad weather in July. "The lack of rises in wages might be behind this," she said. "I'm watching consumption with concern. I don't think the economy will fall into a recession. But we need to be cautious over consumption and also on a possible inventory adjustment in the IT-related sector." At the moment, most economists do not see a sharp inventory adjustment in the high-tech sector. "There will be an inventory adjustment near the year-end, but there won't be a sharp drop in production," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research. Tsunoda said sales of computers are likely to rise early next year after the release of Windows Vista, Microsoft's upgraded operating system, on January 30. Elsewhere, the GDP deflator -- a measure used to derive real GDP from nominal GDP by adjusting for price changes, fell 0.8 percent in July-September from the same quarter a year earlier. (Additional reporting by Tetsushi Kajimoto , Yuzo Saeki , Yoko Nishikawa and Leika Kihara )

Vodafone pleases as earnings top forecasts. British-based Vodafone said earnings before interest, tax, depreciation and amortization (EBITDA) for the first half to September 30 rose to 6.24 billion pounds, well ahead of forecasts of between 5.98 billion and 6.19 billion. Underlying earnings per share also came in well ahead of the average market forecast at 5.98 pence, and Vodafone stuck to its full-year forecasts for organic mobile revenue growth of 5-6.5 percent and EBITDA margins 1 percentage point lower. However, it raised its outlook for free cash flow to 4.7-5.2 billion pounds after it deferred around 700 million pounds in taxes and said it expected its effective tax rate for the full year and future years to be lower than previously indicated. "The operating performance looks solid. The tax charge is a little bit lower which helped the earnings and the cash flows. But lower taxes is still cash in the bank. Very little to complain about, I would say," said Richard Marwood, fund manager at AXA Investments, a Vodafone shareholder. "With this set of results Vodafone has further reduced investor uncertainty and reaffirmed progress on its business plan... Bulls have plenty to be happy about in these results," said Dresdner Kleinwort analyst Robert Grindle. Chief Executive Arun Sarin, who faced shareholder discontent earlier this year over the group's slowing growth and strategy, said the growth had been flat in its mature European markets while its businesses in developing markets of eastern Europe, Middle East, Asia and Africa had grown 14 percent. "Pricing is coming down I'd say 15 percent in our European markets. The fact that we are adding a lot of customers helps us maintain our revenue (growth) of about 6 percent," said Sarin. Vodafone said it had added 12 million new customers in the half year, taking its total base to 191 million users. SURPRISE KNOCK The group unveiled a surprise 8.1-billion-pound ($15.5 billion) knock to the goodwill value at its German and Italian units, blaming higher interest rates along with pricing and continued regulatory pressures in the German market. The fresh impairment charge dragged it to a headline loss of 4.55 billion pounds. A similar impairment charge led Vodafone to report a 21.8-billion-pound loss in the last fiscal year, the biggest in European corporate history. Chief Financial Officer Andy Halford said nearly half -- 3.7 billion pounds -- of the goodwill hit stemmed from higher interest rates and the rest mainly from price cuts in Germany. However, shares in the group, already up 26 percent in the last 3 months, shrugged off the headline losses and rose as much as 4 percent, taking them to levels last seen just before interim results in November last year. By 1205 GMT, the stock was up 0.9 percent at 137-1/4 pence. The stock trades at nearly 13 times next year's forecast earnings, compared with 14.1 percent for the European telecoms sector. Vodafone raised its interim dividend by 6.8 percent to 2.35 pence a share, and reaffirmed plans to pay out 60 percent of its earnings for the full year. The company has already stopped share buybacks this year, after spending billions last year. It also paid out a special dividend of 9 billion pounds last August, principally from the proceeds of its Japanese unit's disposal to Softbank Corp. ( 9984.T ) earlier this year. CEO Sarin, under whose watch the once acquisitive behemoth is making selective disposals to refine its portfolio, doused hopes it could exit France or the Swiss markets in a hurry and dismissed reports it could do a deal with Russia's Alfa group. Sarin said Vodafone was happy with its 44-percent stake in French mobile operator SFR and the chances of its sale to partner Vivendi ( VIV.PA ) were "highly unlikely" and if anything, Vodafone was interested in raising its stake at the right price. However, Sarin said Vodafone would look at a sale of its 25-percent stake in Swisscom Mobile ( SCMN.VX ) "if there was a full offer put on the table".

Nikkei up on strong GDP. Machinery and bank shares were among the beneficiaries of the strong GDP while shares of Aozora Bank Ltd. ( 8304.T ), a Japanese lender floated by U.S. private equity firm Cerberus CBS.UL, slumped in their market debut, marking a sluggish start for Japan's biggest IPO in eight years. After the market closed, Tokyo Electron Ltd. ( 8035.T ) said first half profit rose 55 percent on high orders for chip and liquid crystal display-making equipment and raised its forecast for the full year. "Some investors had sold Japanese stocks betting that the Japanese economy was going to stall. Now these people have had to buy stocks back," said Tsutomu Yamada, a market analyst at Kabu.com Securities Co. "Investors were worried too much." The Nikkei .N225 rose 267.06 points to 16,289.55, while the broader TOPIX index .TOPX advanced 1.76 percent to 1,596.42. Japan's economy expanded 0.5 percent in the three months to September compared with the preceding quarter, beating market expectations of 0.2 percent growth in price-adjusted terms. Still, some analysts agreed that the market should have been higher and investors are still not fully confident about scooping up Japanese stocks. For one thing, companies' full-year outlooks are very conservative, said Masayoshi Yano, a senior manager of investment information at Tokai Tokyo Securities Co. Ltd. "Investors are hung up about the cautious outlooks provided by companies," he said. "There are too many investors who cannot be bullish. That's why stock prices aren't going up." Masaki Iso, head of Japanese equities at Yasuda Asset Management Co. Ltd., agreed. "The GDP numbers were good but the Japanese economy is slowing down," he said. "It's likely that we may see more signs of weakness in the third quarter. Investors were cautious." Trade rose from the previous session, with 1.85 billion shares changing hands on the Tokyo exchange's first section. However, that was little changed from last month's daily average of 1.82 billion shares. Advancing shares beat decliners by a ratio of more than seven to one. GDP EFFECT, FALLING AOZORA Sumitomo Realty & Development, Japan's third-largest property firm, jumped 4.9 percent to 3,620 yen, helping the property subindex .IRLTY.T to be the best performing sector. Sumitomo Mitsui Financial Group Inc. ( 8316.T ) surged 4.2 percent to 1.23 million yen, after falling more than 8.5 percent over the previous five sessions. Top lender Mitsubishi UFJ Financial Group Inc. ( 8306.T ) gained 2.9 percent to 1.44 million yen, snapping its seven-session losing streak. Machinery stocks also benefited from the GDP data which showed strong capital spending. Industrial robot maker Fanuc Ltd. ( 6954.T ) rose 2.7 percent to 10,640 yen. Okuma Holdings Inc ( 6103.T ), a machine tool maker, jumped 10.9 percent to 1,128 yen to become the biggest Nikkei 225 gainer. The company was also bolstered by the Nihon Keizai Shimbun which said on Tuesday the company will likely post a record profit for the year to March 2007, thanks to a weak yen and the brisk capital spending by airlines and energy companies. Shares of Aozora Bank ended their first day at 502 yen, 11.9 percent below their IPO price of 570 yen. Market participants said Aozora's $3.2 billion initial public offering was too big for the market. The size of the offering compares with a daily average turnover of 2.6 trillion yen ($22.1 billion) on the Tokyo Stock Exchange's first section in October. "In terms of valuation the stock does not look cheap ... and I think that has been the market's evaluation. There doesn't seem to be any reason to buy the stock," said Jun Morita, fund manager at Chibagin Asset Management. (Additional reporting by David Dolan )

U.S. government sues former Cendant vice chairman. Shelton was convicted of fraud in January 2005 and sentenced to 10 years in prison for his role in a decade-long accounting scheme that inflated earnings and stock values of Cendant, a real estate and travel company, and its predecessor CUC International. Former Cendant Chairman Walter Forbes was convicted last month for the scheme that -- when revealed in 1998 -- wiped $14 billion off Cendant's market value. It was one of a series of accounting scandals that shook the U.S. corporate world. Shelton was also ordered to pay nearly $3.3 billion in restitution, but he is currently free on bail as he appeals his conviction and sentence. Forbes is due to be sentenced in January. U.S. Attorney Christopher Christie, the chief federal prosecutor in New Jersey, said in a statement on Tuesday that authorities were determined to recover all the money stolen from shareholders. "The charges filed today describe a series of transactions through which Shelton established straw companies and transferred more than $22 million in personal assets to those companies within days of learning Cendant would be pursuing him for the billions of dollars of damages," Christie said. He also accused Shelton of transferring more than $5.5 million to his wife and other close family members. The government is seeking $37.8 million: $30 million in fraudulently transferred assets plus $7.8 million subsequently retransferred among other people named in the lawsuit. Shelton's wife, sister, two sons, niece, nephew and brother-in-law are also named in the lawsuit.

Analysis - The buyers are back, Canada housing market defies doomsayers. "I saw that they are going to increase rates, so I called my bank last Friday and locked in 2.5 percent for 120 days," said the 31-year-old accountant, starting the clock on a four-month search for a new home before borrowing gets more expensive. After nearly a year of cooling sales and plenty of concern that Canada could head for a U.S.-style housing crash, demand has roared back in key markets. What's still unclear, however, is whether the recent surge is a reinflation of a real estate bubble, a final rush of buyers before rising rates choke off demand, or just a sign of market resilience. The rise in mortgage rates comes after North American bond yields jumped on fears that an improving U.S. economy will cause the Federal Reserve wind down its monetary stimulus program, known as quantitative easing, more quickly than expected. After a long cold spring that dampened house hunting, May sales of existing homes rose 3.6 percent, the biggest monthly gain in almost 2-1/2 years, returning the market almost to where it was before Canada's Conservative government tightened lending rules in mid-2012 to stave off a housing bubble. Housing starts also jumped much more than expected in the month, adding to evidence that late-spring buyers have breathed life back into a market that some had forecast was heading over a cliff. Toronto real estate agent Steven Fudge said he was starting to believe the market was back in balance after a cool-down. But the specter of higher rates has brought buyers back, marking either a new phase of a bubble or the last kick of a dying mule, he doesn't know which. "In the last couple of weeks, there's been a real strong murmur ... anticipating a bump in rates," said Fudge, a sales representative at Bosley Real Estate Brokerage, which operates the Toronto property website urbaneer.com. "It's like fuel on the market. There's now a whole bunch of buyers locking in 60- to 90-day mortgage pre-approval." One of his clients lost a 17-player bidding war this week for a downtown Toronto house. The home, listed at C$499,000 ($476,500), sold for more than 25 percent over asking. "I've been counseling buyers to be cautious," he said. "It really feels like almost anything can happen." IS IT A BUBBLE? The question of whether the late-spring surge marks a reinflation of a real estate bubble is hanging over the industry. The federal housing agency, the Canada Mortgage and Housing Corp, this week revised up its outlook for sales, construction, and price increases in 2013 and 2014, effectively declaring the downturn over. "The market was moderating in the second half of 2012. Then we've had an inflection point, and went into a moderate positive trend since the beginning of 2013," said Mathieu Laberge, deputy chief economist at CMHC. "We should see this type of trend for housing starts going forward." The agency, which insures the majority of mortgages Canadian banks issue, expects average national prices to rise 1.6 percent in 2013 and 2.1 percent in 2014, which would be the "soft-landing" policymakers want and a long way from dire predictions of a 10 percent to 25 percent price crash. "I'd say we feel good. I mean, we're not out of the woods yet, but we feel good," said Brian Hurley, chief executive of Genworth Canada, a unit of Genworth MI Canada Inc and the largest private residential mortgage insurer in Canada. Hurley acknowledges he was feeling afraid last year when sales dropped and analysts worried that tighter mortgage rules had squeezed too many buyers out of the market. Prices fell in Vancouver, which had been Canada's hottest market, but national prices gains never slowed below an annual 2 percent. To be sure, some say it is too soon to celebrate the end of the mild downturn, and a spring bounce is not a measure of strength. If buyers want to get into the market before rates rise, won't that just steal demand from the future? Mortgage rates have begun to inch higher as global bond yields climb. Canadian mortgage rates are typically priced off the government's five-year bond, which now yields 1.80 percent, up from a 60-year low of 1.076 percent in June last year. But others believe the spring surge may reflect demand that was held back by the tighter rules, and the housing market's failure to really cool means a bubble is starting to inflate again. Official Canadian interest rates are not expected to rise until late 2014, so mortgage rates won't rise fast or furiously. "A lot of forecasters like myself are expecting a relatively flat market, but there's a significant upside risk that if rates remain at current levels indefinitely, you're going to start to heat the housing market back up," said Craig Alexander, chief economist at Toronto-Dominion Bank, Canada's second-largest lender. ($1=$1.05 Canadian) (Reporting by Andrea Hopkins; Editing by Peter Galloway)

Schmolz+Bickenbach chairman throws in the towel: paper. "There will be a new general meeting and a new board of directors with (Vekselberg's) Renova as dominating shareholder. I will be gone then," Chairman Hans-Rudolf Zehnder told Swiss newspaper Schweiz am Sonntag. Schmolz+Bickenbach could not immediately be reached for comment. Vekselberg, through investment vehicle Renova, acquired a 20.46 percent stake in Schmolz+Bickenbach on Friday from the group Schmolz+Bickenbach GmbH & Co KG (S+B KG), descendents of the company's founders who have been fighting with the board of directors over a restructuring for months. Renova and S+B KG now hold a combined stake of 40.46 percent, which forces Vekselberg under Swiss law to submit an offer to buy the remaining shares in Schmolz+Bickenbach. Renova said it did not want to increase its stake further and hoped existing shareholders would keep their shares. S+B KG said on Saturday the commercial registry office in Lucerne had granted its request to block any new entries to the steelmaker's share register with regard to decisions taken at Friday's shareholder meeting. That means the board of directors and re-elected chairman Zehnder will not be able to execute a 330 million Swiss franc ($348.8 million) rights issue approved by shareholders on Friday. Another major shareholder in Schmolz+Bickenbach, board member Gerold Buettiker's Gebuka, had obtained a court order ahead of the shareholder meeting, allowing S+B KG to only vote with 20.46 percent of shares instead of the 40.46 percent it owned at the time because the remaining 20 percent are tied into a shareholders' agreement with Gebuka. S+B KG said the fact it could only vote with about half of its shares had a decisive influence on the outcome of the shareholders' votes on Friday. ($1 = 0.9462 Swiss francs) (Reporting by Silke Koltrowitz; editing by Jane Baird)

Bahrain economic growth accelerates strongly in first quarter. Gross domestic product, adjusted for inflation, expanded 2.5 percent quarter-on-quarter in January-March, compared to a downwardly revised 0.2 percent in the fourth quarter of 2012. On an annual basis, growth quickened to 4.2 percent in the first three months of 2013, the highest rate in a year, from a downwardly revised 2.5 percent in the previous quarter, the data from the Central Informatics Organization showed. The country of 1.3 million people has based its economic strategy on becoming a regional financial hub as it lacks much of the petrodollar wealth of its Arab neighbors. But political unrest starting in 2011, in which the government has faced mainly Shi'ite-led pro-democracy protests, has hit the economy hard and raised pressure on the government to boost spending. Output in the hydrocarbons sector, which accounts for a quarter of Bahrain's $30 billion economy, grew 1.3 percent in January-March from the previous quarter, against a mere 0.4 percent rise in the final three months of 2012. Hydrocarbon output jumped 8.0 percent on an annual basis in the first quarter after falling by the same amount in October-December. Last year, Bahrain reported a drop in crude oil output from its key Abu Safa field, which it shares with Saudi Arabia and which contributes nearly 67 percent of budget revenue. Growth in Bahrain's financial industry, which accounts for roughly 16 percent of GDP, slowed to 0.3 percent quarter-on-quarter in January-March from 1.4 percent in the previous three months. In the hospitality sector, which nosedived during the 2011 turmoil, output edged up by 0.5 percent in January-March, after a 0.1 percent rise in the fourth quarter. Analysts polled by Reuters in April forecast that Bahrain's GDP growth would ease slightly to 3.3 percent in 2013 from 3.4 percent in 2012. (Editing by Andrew Torchia )

Bumi considers selling Bakries' stake in market for cash: report. The proposal would allow Bumi to return cash to shareholders well in excess of the nearly $300 million already expected to be handed back, the Sunday Telegraph said, without citing its sources. Bumi was co-founded by financier Nat Rothschild and the Bakrie family but has struggled in the past two years to overcome bitter boardroom battles, a probe into financial irregularities and the tumbling price of coal. Its board now wants to overhaul the company by parting ways with the Bakrie family and concentrating on the 85 percent-owned unit Berau ( BRAU.JK ), as opposed to a minority stake in Jakarta-listed Bumi Resources ( BUMI.JK ). A potential sale of the Bakries' stake, however, could prove to be a fresh point of tension between Rothschild and the Bakrie family as well as other potentially affiliated shareholders, the Telegraph said. Bumi declined to comment on the report. Bumi said last month it had completed a review of irregularities in the accounts of Berau, which identified the expenditure of $201 million with no clear business purpose, without elaborating. It said it would seek to recover the money. (Reporting by Stephen Eisenhammer; editing by Jane Baird)

Spain lenders brace for tough year-end as new rules bite. On Thursday, the Bank of Spain urged lenders to cap cash payouts to shareholders to the equivalent of 25 percent of profit and to be cautious on dividends paid in shares. That came hard on the heels of another recommendation from the central bank to calculate the impact of removing minimum interest rate clauses on residential mortgages, a move that would lower payments for homemakers but hit bank profit. Also a long-awaited European deal on how to distribute the cost of bank rescues hit share prices last week of some banks in the region's weaker countries, including Spain, on fears they could find it harder to attract funding. Three banking sources said the new rules did not bode well for the second half of the year because they left investors with the impression that banks had not been fully cleaned up and that more measures were still to come. "The new guidelines on dividends introduce more uncertainty in a sector which already registers high levels of insecurity at a time when the volume of additional provisions that banks will need to book is still unknown," said one of the banking sources, who declined to be named. Lenders had already been asked by the Bank of Spain to review by September their 208 billion euros ($270.5 billion) in portfolios of refinanced loans. Economy Minister Luis de Guindos said lenders would probably have to book another 10 billion euros in provisions to cover potential losses on those loans and seek 2 billion euros in fresh capital once the review is complete. This would add to the more than 80 billion euros booked last year, which hit profit across the board, forced some lenders to scrap dividend payments or raise new funds on the stock and bond markets and prompted the government to seek 42 billion euros from the European Union to recapitalize the weakest ones. HEADWINDS? The massive write downs and the European-financed bailout have partly restored confidence in the Spanish financial system after it was devastated five years ago when a decade-long property bubble burst. The rescue has so far failed to reactivate bank lending to Spanish companies and households, while the rate of non-performing loans continues to rise. The banking source said the latest guidelines on dividends were dictated by the International Monetary Fund, which earlier in June called on Spanish lenders to reinforce the quantity and quality of their capital by being prudent on cash dividends. The source also said the Bank of Spain wanted all Spanish lenders to be fully cleaned up and well capitalized before pan-European stress tests next year. In the short term, however, banks such as Popular ( POP.MC ) and Sabadell ( SABE.MC ), which did not need public aid last year, may face headwinds. Both have high levels of refinanced loans, have heavily used clauses in mortgage contracts that set floors on interest rates and may find it more difficult to fund themselves under the new EU regime, which mean that second-tier banks in the periphery of the euro zone are likely to have to pay a premium to attract equity and debt investors. The new guidelines may make it hard for them to stick to their dividend plans for 2013, analysts say. They also say that other banks that have ridden out Spain's crisis until now, including Spain's three-biggest lenders Santander ( SAN.MC ), BBVA ( BBVA.MC ) and Caixabank ( CABK.MC ) as well as Bankinter ( BKT.MC ), may have to adapt for different reasons. "Santander and Caixabank dividends per share are probably too high. Bankinter probably needs to adjust downwards its cash dividend per share because payout exceeds 25 percent ... BBVA could move to more scrips (dividends paid in shares)," Carlos Garcia Gonzalez, an analyst at Societe Generale, wrote on Friday in a note to clients. State-owned banks including Bankia ( BKIA.MC ) are not safer. Although they already had a ban on dividends until 2014, the three other regulations may weigh on the capacity of the government to apply their restructuring plans and quickly sell them, analysts say. ($1 = 0.7691 euros) (Additional reporting by Jesus Aguado; editing by Fiona Ortiz and Jane Baird)

Irish banker apologizes for taped comments. Public outrage has grown after the Irish Independent published taped telephone conversations between executives of the now-defunct Anglo Irish Bank, wrecked in 2008 when a property bubble burst after years of reckless lending. David Drumm, then-chief executive of Anglo Irish, had said he would demand "moolah" - slang for money - from the central bank in tapes of conversations that mocked a bank guarantee that pushed Ireland into years of austerity. In his first public comments since the tapes were published, Drumm told the Sunday Business Post that the recordings were made at a stressful and volatile time but there was "no excuse for the terrible language or the frivolous tone". "I sincerely regret the offence this has caused," the Sunday Business Post quoted Drumm as saying. "I cannot change this now, but I can apologize to those who had to listen to it and who were understandably so offended by it." Reuters has not been able to contact Drumm, who now lives in Boston. The bank eventually cost taxpayers some 30 billion euros during the financial crisis, almost one-fifth of the country's annual output, and three former executives - not including Drumm - will go on trial next year on fraud charges. The tapes have caused offence in the European Union, which helped to pay for Ireland's bailout, and Irish premier Enda Kenny said they were a "thunderbolt" that showed contempt, arrogance and insolence. One executive, John Bowe, was taped singing a pre-war verse of the German national anthem during a conversation with Drumm as they discussed money flowing in from Germany after the governments guaranteed the banks. German Chancellor Angela Merkel said the recordings were "impossible to stomach". But Ireland has still not held a full public inquiry into its rescue of the banks, which eventually pushed the country into an 85 billion euro bailout from the International Monetary Fund and EU that meant steep salary cuts and tax rises. Drumm said the public were only being offered selected excerpts of banking conversations and they told a one-sided story. He wanted taped calls between his bank, the regulator, central bank and finance ministry also to be published to provide more context. "I believe that the Irish public will see a very different picture when the full story is told, having been denied a full account of the circumstances for so long," he said. (Reporting by Sam Cage , editing by Gareth Jones)

Blackstone, Lion Capital to bid for GSK's Lucozade, Ribena: report. GSK has been increasingly focusing its consumer health operations on emerging markets and put Lucozade and Ribena -- brands that are big sellers in Britain but lack global reach -- up for sale as they no longer fit in with the company's portfolio. Last month, GSK said it had appointed JPMorgan and Greenhill to advise it on the sale. Blackstone and Lion Capital have appointed bankers at Rothschild to advise them on their bid, Sky News reported. Both Blackstone and Lion Capital could not be reached for comment outside regular business hours. (Reporting by Abhishek Takle in Bangalore; Editing by Marguerita Choy)

Onyx explores possible sale, rejects Amgen offer. The company said the offer price by Amgen of $120 a share in cash, which represents a premium of about 38 percent to the company's Friday closing price, "significantly undervalued" its prospects. Onyx said in a statement it was "actively exploring" a merger partner, and that it had hired financial advisor Centerview Partners to contact potential buyers. The San Francisco-based company cited "expressions of interest" from Amgen and other unnamed third parties. An Onyx spokeswoman declined to comment further on the statement. Amgen could not be reached for comment. Onyx has a market cap of $6.32 billion and revenue of $362 million in 2012, while Amgen is the world's largest biotech company, with a market cap of about $74 billion. Onyx sells thyroid cancer treatment Nexavar and colon cancer drug Stivarga in partnership with German pharmaceutical company Bayer AG ( BAYGn.DE ). Amgen has been looking for new ways to boost its product pipeline as sales for its anemia drugs Aranesp and Epogen have been in a decline for years because of usage restrictions and safety concerns. The company said earlier this year it was making a push into biosimilars - cheaper alternative versions of biotech medicines - with plans to launch six beginning in 2017. Amgen's first-quarter sales fell short of expectations, as revenue for the period rose 5 percent to $4.24 billion which was short of Wall Street projections of $4.37 billion. The Financial Post reported the offer on Friday, sparking a steep jump in Onyx shares in after-hours trading. ISI Group analyst Mark Schoenebaum wrote that if a deal were to be made, Onyx's Kyprolis cancer drug would fit well into Amgen's cancer drug sales and marketing infrastructure and complement Amgen's portfolio of cancer drugs. Kyprolis, developed for patients with multiple myeloma who have received at least two prior therapies, was approved by the Food and Drug Administration last July. Large pharmaceutical companies have increasingly been looking to acquire smaller biotech firms to gain access to new drugs as they face significant revenue losses stemming from expired patents. This need has driven the volume of healthcare M&A in the first six months of 2013 to $93.6 billion up 30.2 percent over the same period last year. Recent deals include generic drugmaker Actavis Inc's ( ACT.N ) $8.5 billion acquisition of Warner Chilcott and Human Genome Sciences' $3 billion sale to GlaxoSmithKline Plc ( GSK.L ). (Editing by Doina Chiacu , Bill Trott , Marguerita Choy and Diane Craft )

Brazil to raise taxes to offset any future subsidies: minister. "If we cut taxes further, like we did on diesel sales, all the foregone revenues will be compensated by spending cuts or other taxes," Mantega told O Globo. After missing its main budget target last year, Brazil has struggled to improve its finances and regain investors' confidence. The task has become even more challenging as the government faces the largest street protests in decades, with more than 1 million Brazilians demanding better public services. Brazil had offered a slew of tax breaks and other subsidies in the past few years, without raising other taxes, in an attempt to revive economic growth. However, while the economy has failed to improve substantially, the deterioration in Brazil's fiscal accounts prompted the Standard and Poor's ratings agency to warn of a possible downgrade of Brazil's debt rating. "Even the United States were downgraded already. That's life," Mantega said. "What is important to me is the economic performance, public accounts, inflation. We will perform better this year than in 2012." Brazil is expected to grow 2.5 percent this year, according to the median forecast in a weekly central bank survey with around 100 economists. It expanded just 0.9 percent last year. (Reporting by Natalia Gomez; Writing by Silvio Cascione ; Editing by Bill Trott )

Fund firms' boycott threat could hurt Lloyds stock sale. Some fund managers say they are wary of buying stock released in staggered sales until banks and regulators clarify the rules on how quickly company owners are allowed to sell more shares - a dispute that could hurt large stock offers such as Lloyds. They say they have been burned before by banks allowing owners to bypass lock-up agreements, which are meant to prevent too much stock hitting the market too fast and pushing the share price down. Any boycott could complicate the privatization of Lloyds Banking Group ( LLOY.L ), one of the government's most high-profile strategies to show it is improving Britain's national finances and getting banks to lend more to businesses. "Decisions to blacklist are on people's agenda," said one fund manager at a UK investment house running around 80 billion pounds in assets. "This goes right to the heart of whether we have trust in the markets in which we operate." This shareholder and the other investors who talked to Reuters all declined to be named because of the sensitivity of the situation. The debate was prompted by a deal in May, where Lloyds sold 15 percent of wealth manager St James's Place ( SJP.L ), just over 10 weeks after a previous sale, despite having agreed not to reduce its stake further for at least a year. The lock-up was waived by bookrunner Bank of America Merrill Lynch ( BAC.N ). Lloyds and BoAML declined to comment. Although lock-ups are waived relatively often, and investors are warned that the timetable for additional share sales can change, it usually happens closer to the expiry date than in the St James's case. A person familiar with the matter said the sale had the backing of the Treasury and of UKFI, the organization which manages the government's stakes in banks, because Lloyds needed to boost its capital, and the offer drew strong demand. However, investors say they want clarity on the terms and conditions under which such agreements can be waived. The government has flagged it is ready to start offloading shares in Lloyds and on Friday began the process of appointing advisors for the sale, which is expected to take place incrementally over many months. Further down the line, the government will also look to sell down its even larger stake - 81 percent - in Royal Bank of Scotland ( RBS.L ). "It is very important the authorities do what they can to shore up investor confidence before the likes of Lloyds and RBS come to market. They will be some of the biggest partial stake sales seen for a long time," said a second UK investor at a fund management firm running around 50 billion pounds ($76 billion) of assets. UNDERMINES INTEGRITY The Association of British Insurers (ABI) has written to regulator the Financial Conduct Authority (FCA) asking them to look at the issue of lock-ups and their importance in maintaining an orderly market, three people familiar with the matter said. The ABI declined to comment. Some investors are waiting for the outcome of the ABI's discussions with regulators and bankers on whether Lloyds and its advisers behaved appropriately before deciding whether to impose boycotts. A spokesman for the FCA said the regulator was aware of the issue and was looking into whether this comes under its remit. People working in equity capital markets say waiving a lock-up is not a decision which is taken lightly, and is only usually done when a stock price has performed strongly, investors want more shares and the seller has a legitimate reason for wanting to raise money. "While exercising waivers does undermine the integrity of any other lock-ups, generally such early sales are only likely to happen when there is reasonable market demand, thus clearing share overhangs when the market has the appetite," a third investor said, echoing this sentiment. St James's Place shares had risen 25.5 percent between the first and second sales. The second sale was done at a 9.4 percent discount and after the sale the shares opened nearly 11 percent below the previous day's closing price. "There is a requirement on companies to take all reasonable care to make sure that any announcement they make to the market is not misleading, false or deceptive and doesn't omit anything that is likely to impact the significance of what they are announcing," the first investor said. "There is a real question here about whether this contravenes the rules and the FCA needs to clarify this." (Editing by Ruth Pitchford)

VDM sale attracts bids from financial investors, paper. Handelsblatt said in a report due to be published on Monday, citing financial sources, that the bids were in the high three-digit million euro range, below the 1 billion euro ($1.3 billion) level Outokumpu had in mind. A decision will be made soon on selection of a short-list of candidates, it said. VDM is part of stainless steel producer Inoxum, which German steelmaker ThyssenKrupp ( TKAG.DE ) sold to Outukumpu last year. In May this year, Outokumpu said it might sell VDM, indicating it was struggling to turn a profit from its acquisition of Inoxum. ($1 = 0.7693 euros) (Reporting By Marilyn Gerlach)

U.S. Energy Department pledges action in handling gas export applications. "I'm planning to go through them as rapidly as I can ... I certainly expect to have a fair amount of action this year," Moniz, who took office last month, said in an interview in the Austrian capital. U.S. companies hoping to export natural gas are frustrated by lengthy delays and rule changes as they await Department of Energy approval of their applications. But some U.S. manufacturers and lawmakers have warned that a rapid and unlimited push to export liquefied natural gas (LNG) could lead to a sharp rise in gas prices and harm consumers and energy-intensive industries. (Reporting by Fredrik Dahl ; editing by Jane Baird)

Cuba's non-farm co-ops debut this week amid move toward markets. The cooperatives will be the first outside of agriculture since all businesses were nationalized in 1968. The government says many more establishments will follow, beginning in 2014, as an alternative to small and medium-sized state businesses in retail and food services, transportation, light manufacturing and construction, among other sectors. The produce markets were supplied exclusively by the state, which also set prices and wages. As cooperatives they will now purchase produce from any source and set their own prices, with the exception of a few state supplied staples, for example rice, chick peas and potatoes in Havana. At one of the dozens of Havana markets set to become cooperatives this week, the mood was festive on Saturday as workers painted the dark and dingy premises, fixed broken bins and in general spruced up the place on their last day as state employees. "We were given the choice of working as a cooperative member or being laid off," Antonio Rivera, a worker turned member, said. "I think we will be better off so I joined," he said. On Sunday the 100 markets took inventory and made other preparations, before their adventure into the country's growing "non-state" sector began. President Raul Castro, who took over from his brother Fidel in 2008, has already taken steps to deregulate small private businesses in the retail sector, lease small state shops and taxis to individual employees and fallow state lands to would-be small farmers in search of improved production and efficiency. According to the government, more than 430,000 people now work in the non-state sector which consists of private entrepreneurs, their employees and individuals who own or lease taxis and the like. The figure does not include some 2,000 agricultural cooperatives and 400,000 small farmers. MARKET ECONOMICS HAILED The new cooperative markets average 15 or fewer members and will lease their premises from the state. They will function independently of state entities and businesses, set prices in cases where they are not fixed by the state, operate on a democratic basis, divide profit as they see fit and receive better tax treatment than individually owned businesses, according to a decree law published in December. The law allows for an unlimited number of members and use of contracted employees on a three-month basis. The newly elected administrator of one market said that for weeks they had been making contact with farm cooperatives in preparation for Monday, and could also buy from individual farmers and state farms and wholesale markets. "I'm sure the public will benefit. The produce will be of better quality, there will be better service and people will go where the prices are the lowest," he said, asking his name not be used because he feared he would get into trouble for talking to a foreign journalist. "There will be more competition and the winners will be those who do the best job," he said, adding, "everything will depend on us and we will have to look for merchandise wherever because if we don't we will not make anything." Consumers appeared to support the measure, though some fretted over a possible increase in prices. "They should have done this long ago," Soledad Martinez said as she shopped at the market on Saturday. "Now there will be a greater variety and we will be treated better. I just hope prices decrease a bit and do not go up," she said. Cuban authorities began discussing three years ago how to transform bankrupt small and medium-sized state businesses - plagued by pilfering, embezzlement and general inefficiency - into cooperatives. The Communist Party adopted a sweeping five-year plan to "update" the economy in 2011, which included moving more than 20 percent of the state labor force of 5 million people into a new "non-state" sector of private and cooperative businesses.` (Editing by Eric Walsh )

Greece, lenders resume talks on 8.1 billion euro bailout tranche. Greek officials including Prime Minister Antonis Samaras have said they expect the talks to conclude successfully, despite setbacks to the country's privatization program and delays in public sector reform. The stakes are high. If the talks fail, the IMF might have to withdraw from Greece's rescue to avoid violating its own funding rules. Athens also needs the cash to help redeem about 2.2 billion euros of bonds in August. The installment is one of the last big cash injections Athens stands to get under its 240-billion euro bailout which expires at the end of 2014. Finance Minister Yannis Stournaras will have his first meeting with representatives of the European Union, the European Central Bank and the International Monetary Fund, also known as the "troika", at 10 a.m. ET. Samaras wants to wrap up the talks quickly for the funds to be released by the end of this month. He appointed two ardent reformers, Kyriakos Mitsotakis and Adonis Georgiadis, in a cabinet reshuffle last week to push for reforms at key ministries, civil administration and health. "The lenders will give us trouble but less so than in previous reviews," one government aide told reporters on Sunday. MISSING TARGETS The government plans to ask creditors to lower this year's privatisation target of 2.6 billion euros after failing to find a buyer for natural gas company DEPA. [ID:nL5N0EN16J] Athens has also missed a June deadline to place 12,500 state workers into a so-called "mobility scheme", under which they are transferred or dismissed within a year. A shortfall of more than 1 billion euros has emerged at state-run health insurer EOPYY, meaning automatic spending cuts may have to be agreed to bring it on an even keel. Athens and the troika are also at loggerheads over an unpopular property tax and over a possible reduction in a consumption tax for restaurants. Samaras has ruled out imposing new austerity measures after losing a coalition partner in the ERT crisis, with his majority in the 300-seat parliament shrinking to just three votes. More measures will be impossible to steer through parliament, analysts and lawmakers have said, after four years of austerity which plunged Greece into its deepest peace-time recession with the jobless rate at a record 27 percent. The economic crisis has also boosted support for anti-bailout parties such as the ultra-right Golden Dawn. According to Greek officials, the country has enough spare cash to offset any short-term slippages in the bailout plan. Helped by tight spending, the budget deficit was about 3 billion euros smaller than expected in January-May, Stournaras said last week, adding that the country had also money left over in bank rescue fund HFSF. [ID:nL5N0F13HX] But even if it clears the ongoing troika review, Athens will require additional help to stand on its own feet after the current bailout expires at the end of 2014. According to provisional EU/IMF estimates for 2015-2016, Greece must plug a budget shortfall of about 4 billion euros and a funding gap of up to 9.5 billion. These estimates are to be updated later this year. The euro zone has already pledged to shave off part of Greece's debt to make it sustainable in the long term. But it is still unclear how much debt will be written off and how. ($1 = 0.7693 euros) (Editing by Gareth Jones )

Nokia agrees to buy Siemens' stake in NSN joint venture: Bloomberg. The deal, which will see Nokia pay less than 2 billion euros ($2.60 billion) for Siemens' 50 percent stake in the joint venture, could be announced as soon as Monday, Bloomberg reported. Nokia will use a bridge loan to help finance the purchase, Bloomberg said. Nokia, Siemens and NSN could not be reached for comment outside regular business hours. A founding six-year pact binding Siemens and Nokia in NSN expired in April and both companies have been looking to exit the joint venture through a buyout or public offering. Earlier this month, three sources familiar with the matter said Siemens was seeking offers from private equity firms to buy its stake in the joint venture which has shown signs of a turnaround in recent quarters, helped by a massive restructuring drive last year. (Reporting by Abhishek Takle in Bangalore; Editing by Marguerita Choy)

Exclusive: Bear market in gold pummels Einhorn's Greenlight fund. Einhorn, one of the most widely followed hedge fund managers and known for warning about Lehman Brothers' precarious finances before it collapsed, has also seen his flagship $8 billion Greenlight Capital fund under recent pressure though it is still up for the year. In June, Greenlight's flagship portfolio was down 1.1 percent but still up net 7.4 percent year to date, according to one of the sources. Einhorn, largely known for going both long and short on stocks, formed the Greenlight gold fund to include the same investment strategy as the main fund but offers a share class backed by physical gold. The gold fund, with a minimum investment of $1 million, had $929 million under management and 266 investors as of March, according to a recent regulatory filing. The sources said the fund's dollar-denominated class represents a "majority" of the gold fund and is up 7.1 percent for the year. The remainder is in the gold-denominated class, which is down 11.8 percent in June alone and 20 percent so far this year. That's consistent with the sector's plunge this year. The gold-denominated fund gives Greenlight investors exposure to gold through the fund's investments, then reprices them in gold as opposed to U.S. dollars. Gold, which fell below $1,200 an ounce on Thursday for the first time in three years, posted its largest quarterly loss in at least 45 years amid fears the U.S. Federal Reserve may wind down its stimulus program. After Friday's rally of 2.3 percent, gold is still 23 percent lower for the second quarter, its biggest decline since at least 1968, according to Reuters data. Einhorn has said he prefers investing in gold bars, as opposed to the popular gold exchange-traded fund, SPDR Gold Shares ( GLD.P ), partly to have better control over his investment and keep a lid on trading expenses. In 2009, Einhorn said at the annual Value Investing Congress that he was holding gold as a hedge for what he described as unsound U.S. policies. "If monetary and fiscal policies go awry," investors should buy physical gold and gold stocks, he said at time. "Gold does well when monetary and fiscal policies are poor and does poorly when they are sensible." This March, a month before the big April swoon in gold prices, the Greenlight Gold fund completed a financing deal with HSBC for an unspecified sum, according to a financing statement. The fund also has a financing agreement with Goldman Sachs. Einhorn's dedicated gold fund will not be the only portfolio in the $2.2 trillion hedge fund industry that got burned in June from an investment in precious metals. In April, a dedicated gold fund managed by John Paulson was down about 27 percent, bringing the year-to-date decline at 47 percent. Soon after, Paulson, who is the largest investor in the fund, limited the release of performance figures for his gold fund, worried it was getting too much attention in the media. Earlier this year, the Paulson gold fund had about $700 million in assets. Paulson also invests in gold miners and in the gold ETF for his Advantage funds, which have about $5 billion in assets. Einhorn's flagship fund also invests in gold. Earlier this year, the manager listed gold as one of the five largest positions in the fund. Reuters previously reported that Einhorn stores some of his gold in a secure facility in Queens, New York. Dan Loeb's $12 billion Third Point firm also had a sizable position in physical gold in his portfolios but people familiar with the matter said he exited the positions in the spring. An investor with Loeb who did not want to be identified said the Third Point Partners fund fell 1.7 percent in June, but was still up 13.2 percent for the year. (Additional reporting by Matthew Goldstein ; Editing by Jeffrey Benkoe)

Toyota heir takes centre stage in drive to shed 'boring' tag. That's changing. In recent months, Toyota founding family scion and President Akio Toyoda has emerged from the bureaucratic shadows to present himself as the company's car-loving, fashion-forward salesman-in-chief. The marketing campaign aides have built around Toyoda is an unconventional move for a Japanese corporate icon where team play is prized above outsized personalities. In recent weeks, Toyoda has donned a race suit to drive the Lexus LFA super car at the 24-hour race in Germany's Nuerburgring circuit and turned up at a Lexus party in New York with a hipster bow-tie and retro glasses. Meanwhile his assistants have kept a steady newsfeed on the "Toyota President's Office" Facebook page, which Toyoda was inspired to set up by the popularity of Japanese Prime Minister Shinzo Abe's page. "I am at the top of Toyota and drive cars myself," Toyoda told reporters at an event in May when discussing the role he can play in to promote and develop the Lexus brand, which he has been directly overseeing since April. "I was also born with this name." Toyota, which marked its 75th anniversary last year, for decades let its product speak for itself by building value-priced cars with bulletproof quality. CELEBRITY BOSSES In an industry with more than its fair share of celebrity CEOs comfortable with the limelight, such as Chrysler's Lee Iacocca and Nissan Motor Co ( 7201.T ) and Renault SA's ( RENA.PA ) Carlos Ghosn, at Toyota the real star has always been the "Toyota Way" -- the production and management philosophy passed down from one generation to next from founder Kiichiro Toyoda. But as rivals from General Motors Co ( GM.N ) to Hyundai Motor Co ( 005380.KS ) to Volkswagen AG ( VOWG_p.DE ) have narrowed the quality gap, the Japanese automaker has been forced to respond. In a J.D. Power & Associates survey of initial quality released in June -- the benchmark for the industry -- General Motors finished ahead of Toyota, highlighting the increased challenge for the one-time quality king. To push back, Toyota has been trying to make its cars more stylish. To shake up its slow decision-making process, it has split the carmaker's operations into four business teams and named non-Japanese to head regional operations in some areas. It is also trying to bring a new edginess to its brand image and design. That strategy has put the spotlight on the 57-year-old Toyoda, according to people involved in the effort. It marks an unlikely, mid-career emergence for Toyoda, the grandson of the company's founder, who just a few years ago was blogging under a pseudonym. "One of the main things he is doing is giving Toyota, the company, a personality," said Julie Hamp, Toyota Motor North America's Group Vice President in charge of communications. "He knows that Toyota needs a story and products to fire the emotions and to ground our identity in new realities today, which is a more competitive environment." Toyota declined to make Toyoda available for an interview. He and six executive vice presidents are set to speak to the media on Monday. What pushed Toyoda to embrace a radical corporate image makeover was a series of recall crises that hit the automaker in 2009, a senior Toyota executive said. Toyota recalled millions of vehicles globally because of problems including a glitch in the accelerator and floormat design. SHIFTING GEARS The company's response to the crisis was slow and, most damagingly, Toyoda failed to speak up for the company. After weeks out of the spotlight, Toyoda, who had only been in the top job for eight months, called a news conference in Nagoya to apologize, but struggled to provide an English soundbite. When Toyoda was grilled by a U.S. congressional committee in February 2010, the experience was scarring, people knowledgeable about his thinking have said. It left him convinced the company had to change its approach to communication. Until then, Toyoda had seemed uncomfortable with reporters, only lighting up when talking about his great grandfather's loom design or the principles of Toyota's quality control, and he remained reluctant to put himself in the spotlight. To give him a nudge, the senior Toyota executive said, Toyota designers prepared a kind of mock fashion magazine for their boss, featuring scenes with stylishly dressed male models all with Toyoda's head superimposed on the image. The idea was that Toyoda could be the star salesman if he could represent the brand and improve its image with edgy fashion at certain events. Toyoda first balked at the idea, but has since warmed to the role. In April, he took stage with a new look -- retro glasses, hip bowtie -- at the design-themed event for the luxury Lexus brand held in New York. "The image of Toyota might have been that it is massive and hard to approach, especially those executives at the top who run the company - they are out of reach, above the clouds," the senior executive said. "That might have been the case in the past, but now that's no longer true." (Additional reporting by Kentaro Sugiyama; Editing by Norihiko Shirouzu, Kevin Krolicki and Alex Richardson )

Alabama county files exit plan to end $4.2 billion bankruptcy. The court filing is the latest chapter in a saga of corruption and mismanagement of public finances that forced the most populous county in the southern U.S. state of Alabama to ask for protection from creditors in November 2011. Nineteen months after filing for bankruptcy, and at a reported cost of $20 million in lawyers fees, the county is now on track to exit Chapter 9 by year's end. The defaults and losses imposed on bondholders of a scale not seen since the 1930s will translate into pricier borrowing by the county for decades, portfolio managers and analysts have said. The county's debt ballooned in the mid-2000s, when warrants issued to upgrade its sewer system spiked amid bribery and fraud charges that led to some 22 convictions. Larry Langford, a Democrat and former mayor of Birmingham, was sentenced to 15 years in prison for having accepted jewelry and lavish gifts for his role in deals that fueled the multibillion-dollar sewer debt. Jefferson County's case may soon be eclipsed as the largest government bankruptcy in U.S. history by Detroit, a faded industrial center whose emergency manager has offered unsecured creditors as little as 10 cents on the dollar. Details of the Jefferson County plan, which must be approved by U.S. Bankruptcy Court Judge Thomas Bennett, were hammered out in closed-door talks and rely on a planned sale by the county in late 2013 of about $1.9 billion of refinancing bonds. "All major stakeholders in the case are or are expected to be supportive of the county's plan of adjustment," said David Carrington, president of the Jefferson County Commission. Most major creditors, including bond insurers Financial Guaranty Insurance Co (FGIC), Assured Guaranty Ltd and a unit of Syncora Holdings Ltd, as well as seven hedge funds, agreed in recent weeks to substantial reductions in debt. County officials said owners of 82 percent of its debt were behind the 101-page plan, which includes locally unpopular sewer-rate increases to help pay the debt over coming decades. JPMorgan, a big holder of the county's $3.1 billion of sewer warrants, took the biggest hit by agreeing to give up about $842 million of the $1.218 billion of sewer debt it holds, as well as other concessions. That will allow the big bank to recover barely over 30 percent of its sewer holdings. The bankruptcy agreement is additional pain for JPMorgan, which in 2009 paid $75 million to the county and dropped credit-default swaps claims valued at $657 million as part of a settlement with federal regulators over alleged secret payments connected to Jefferson County bond deals. The agreement also calls for increases in sewer rates of 7.41 percent a year for four years and comes after the county cut hundreds of jobs, ended in-patient care at a hospital for poor people in Birmingham, and slashed services. Although the local economy is doing well with a 5.5 percent jobless rate, investors are likely to demand a premium when the county again taps the municipal bond market. Its planned $1.9 billion sale is likely to require Jefferson County to pay unusually high interest rates because of its defaults. Jefferson County officials have said the negotiated deals would cost the county $200 million less, if enacted, than a tentative $2.05 billion agreement reached but never implemented ahead of the county's November 2011 bankruptcy filing. Carrington, who bargained with creditors, said, "The plan achieves the fundamental bankruptcy purpose of giving Jefferson County a 'fresh start'." (Reporting by Michael Connor in Miami; Editing by Tiziana Barghini and Diane Craft )

Employees aim for up to 5 percent stake in VW: report. "I don't know how much we will end up with. It certainly won't be 10 percent overnight, but between one and five percent to begin with," Sueddeutsche Zeitung quoted Bernd Osterloh on Saturday as saying. It was not clear yet how the employees would finance the purchase of their stake, the paper said. Volkswagen -- Europe's biggest carmaker -- agreed to buy a 42 percent stake in the sports car unit of debt-ridden Porsche SE earlier this month. It will pay up to 3.3 billion euros ($4.7 billion) this year for the initial stake in the unit, Porsche AG, paving the way for the creation of an "integrated" automotive group by the end of 2011. To finance the purchase, Volkswagen plans a capital increase of preference shares in the first half of 2010. (Editing by Mike Peacock)

AIG weighing many options for ILFC: sources. The alternatives include the possibility of carving out a new, independent company, the sources said, but added that discussions were in preliminary stages and nothing had been determined yet. Separately, the Wall Street Journal reported that Udvar-Hazy was in early talks to buy a portion of ILFC's aircraft portfolio and start a new leasing company. AIG and ILFC President John Plueger declined to comment. Udvar-Hazy could not be reached immediately for comment. The sources declined to be identified because discussions are private. ILFC, one of the biggest customers of Boeing Co ( BA.N ) and Airbus ( EAD.PA ), has been on the block since late last year after its parent's near-collapse. But a sale has proven to be a challenge due to its mountain of debt and funding needs amid the financial crisis. The company had more than $30 billion in debt, some of which starts to mature in October. ILFC had a book value of about $8 billion as of June 30, but it drew bids that valued it at less than half that. In June a source told Reuters that AIG had picked a consortium that included private equity firms Onex Corp ( OCX.TO ) and Greenbriar Equity Group as the preferred bidder for the unit. Udvar-Hazy was expected to stay on and head the unit under the new buyer as part of any sale, the second source said. Initially, Udvar-Hazy had considered becoming one of the buyers in a consortium of bidders, but eventually decided against it, the source added. Another source familiar with the situation said on Friday that the auction process had been paused as AIG's new CEO, Robert Benmosche, reviews the divestiture process. Benmosche told Reuters this week that the fate of the airplane leasing company was under review. "I am looking at ways we can structure this so we can get more value for what that business is today. Remember that we own more than 1,000 commercial aircraft," he said. "We have to look at ways of financing the debt on those planes as we continue to take very good, healthy lease income," he told Reuters. (Additional reporting by Ben Klayman in Chicago, editing by Eric Walsh)