TOKYO (Reuters) – Asian share markets struggled to hold early gains on Monday, with bank shares pressuring some lower even as tech stocks gained, while the dollar held steady on the yen and hovered near a three-month high on the euro.

In Europe, Britain&&9;s FTSE 100 (.FTSE), Germany&&9;s DAX (.GDAXI) and France&&9;s CAC-40 (.FCHI) were expected to open as much as 0.7 percent up, reassured by export data out of Japan, which rose the most in seven years last month.

Shares in Hong Kong (.HSI) and Shanghai (.SSEC) slid as financial and property stocks fell on concern China would take steps to cool the property market, while banks such as HSBC (0005.HK) eased on worries they made need to make provision against exposure to debt in Dubai.

Debt-ridden conglomerate Dubai World is expected on Monday to ask key creditors for more time to pay off loans.

Seoul shares ended 0.17 percent lower, with banks including KB Financial Group (105560.KS) weighing but gains in technology exporters such as LG Electronics (066570.KS) lending support.

"Banks are under pressure amid recent news flows pointing to a tighter regulatory environment, potentially worsening net interest margins," said Kwak Joong-bo, a market analyst at Hana Daetoo Securities.

Banks face having to set aside more funds or raise fresh capital in as little as three years, according to proposals by a global regulatory body that could change the way they do business.

The MSCI index of Asian stocks excluding Japan (.MIAPJ0000PUS) fell 0.5 percent.

Bucking the trend were Japan and Taiwan, which both finished higher, while

The Nikkei average (.N225) closed up 0.4 percent as stocks such as chip-tester maker Advantest Corp (6857.T) gained.

"Investors welcomed solid earnings results from Oracle and (BlackBerry maker) Research in Motion over the weekend, as well as a weaker yen," said Norihiro Fujito, general manager of investment research at Mitsubishi UFJ Securities in Tokyo.

"But trading volume is becoming thin as the year-end draws near and the market could easily turn south if the yen strengthens again no credit check payday loan."

Upbeat results from Oracle (ORCL.O) and Research In Motion (RIM.TO) (RIMM.O) helped boost the Nasdaq (.IXIC) on Friday, which ended up 1.45 percent.

The Dow Jones industrial average (.DJI) closed up 0.20 percent and the Standard & Poor&&9;s 500 Index (.SPX) rose 0.58 percent. (.N)

Australian stocks slipped 0.3 percent (.AXJO) but top airline Qantas Airways Ltd (QAN.AX) jumped after flagging a return to profit.

Banking shares were mostly lower after leading a rise of nearly 47 percent in the benchmark share index from a five-year low reached in early March.

DOLLAR HOLDS PATTERN

The dollar hovered near its highest point in more than three months against the euro as traders anticipated more year-end dollar short-covering until the Christmas break later this week.

A brighter outlook for the U.S. economy after stronger figures on the job market and retail sales earlier this month has helped the dollar pull back from a long-running downtrend.

"The dollar may extend gains a little more as momentum buyers could chase the dollar up while it stays in an uptrend," said Masafumi Yamamoto, chief FX strategist for Barclays Capital in Japan.

The euro was steady at &&6;1.4344 after dipping to &&6;1.4262 on Friday, its lowest since early September. The dollar was unchanged at 90.40 yen, after touching its strongest level for six weeks on Friday.

U.S. crude futures edged down, paring Friday&&9;s 1 percent rise after news Iranian troops had partly withdrawn from a disputed oil area claimed by both Tehran and Baghdad, easing tensions between two major crude exporters. NYMEX crude for January delivery was down 13 cents at &&6;73.23 a barrel.

U.S. Treasury debt prices were steady while Japan&&9;s five-year government bond yield fell to a four-year low, following comments last week by the Bank of Japan that it would not tolerate deflation.

(Additional reporting by Jungyoun Park in Seoul, Denny Thomas in Sydney; Editing by Kazunori Takada)

Banks weigh on Asian shares, dollar steady

Wall Street swung lower on Tuesday after weaker wholesale prices and a tepid report on new-home construction pointed up the economy&S217;s lingering travails.

The backslide came even after a string of bellwether companies including Apple, the drug maker Pfizer and Caterpillar, which manufactures industrial equipment, reported strong profits.

After rising nearly 100 points on Monday, the Dow Jones industrial average lost 50.71 points, or 0.5 percent, to end at 10,041.48. The wider Standard &&8; Poor&S217;s 500-stock index fell 6.85 points, or 0.62 percent, to 1,091.06, and the Nasdaq was off about 0.6 percent at 2,163.47.

More than half of companies reporting earnings so far have beaten analysts&S217; expectations, raising hopes that companies are past their worst financial troubles, according to the analyst Howard Silverblatt of Standard &&8; Poor&S217;s.

Earnings per share are coming in nearly 12 percent ahead of expectations, and companies&S217; sales figures are also beating estimates. The higher sales figures could offer a balm to investors worried that companies had been generating profits only through aggressive cost-cutting, and not by increasing revenue.

So far, the earnings have bolstered investors on Wall Street. The major indexes are up about 3 percent for the month, their eighth consecutive month of gains, and shares of Apple are close to record highs.

&S220;This is a broad-based rally,&S221; said William Rhodes, chief investment strategist of Rhodes Analytics. &S220;I did not find anything in the market this week that I could go out and short.&S221;

But on Tuesday, investors seemed preoccupied by signals that the housing market remained sluggish and by signs that some industries were still hamstrung by lower prices.

&S220;The bulls need to see the quality of earnings improve,&S221; Steven Ricchiuto, chief economist at Mizuho Securities, wrote in a note to clients. &S220;The market is so far ahead of the economy that unless the quality of earnings improves, the broad market is due for a consolidation pay day advance.&S221;

Shares of basic-materials producers, utilities and energy companies fell the most, as prices of commodities like oil, copper and coffee receded. Crude oil futures fell 52 cents to settle at $79.09 a barrel in New York, but were still near their highest levels of the year.

Financial stocks also fell, a day before two big players in the world of investment and consumer banking were set to release their results. Those banks, Wells Fargo and Morgan Stanley, are announcing their third-quarter earnings on Wednesday before the markets open, capping the major financial earnings reports.

Earlier this month, JPMorgan Chase and Goldman Sachs reported big profits while Citigroup and Bank of America continued to struggle.

Caterpillar gained the most in the Dow&S217;s roster of blue-chip stocks, rising 3.4 percent after its earnings topped estimates. The aircraft maker Boeing fell nearly 3 percent after analysts downgraded its stock, and the military contractor Lockheed Martin fell more than 6 percent after cutting its outlook.

Investors were wary of home-building companies like Brookfield Homes and Pulte Homes after the government&S217;s latest report on housing starts and building permits. The Commerce Department reported that new-home construction rose slightly in September, but fell short of economists&S217; predictions.

Weakness in stocks reinvigorated the dollar for a day, and set off demand for safer investments like Treasury bonds. The 10-year note closed up 13/32, to 102 11/32. The yield fell to 3.34 percent, from 3.39 percent late Monday.

Following are the results of Tuesday&S217;s Treasury auction of four-week and 52-week bills:

Stocks and Bonds: U.S. Stocks Falter on Economic Data

LOS ANGELES (AP) &<51; American and Egyptian authorities have charged nearly 100 people with helping an identity theft ring steal money from thousands of bank accounts.

An FBI statement said that an indictment unsealed Wednesday in Los Angeles charges more than 50 people in the United States with running the &S220;phishing&S221; scheme. Egyptian authorities have charged another 47. The FBI says it&S217;s the largest number of defendants ever charged in a cybercrime case.

The indictment claims Egyptian hackers used e-mail messages to direct victims to phony bank Web sites, where they were asked to provide account numbers free credit scores. Authorities say the crooks then raided their bank accounts.

The FBI says 33 people were arrested Wednesday morning, mostly in Southern California, Nevada and North Carolina.

Dozens Arrested in Online Fraud Crackdown

Hot News: Parental Guidance on Web Video for Children

Mobile phones in Kenya can be used to transfer fundsIn Kenya, sending money home to villages and farms from the city used to be problematic. Many people in rural areas do not have access to banking, making it difficult for them to receive and send money. But a revolutionary mobile telephone system is making it easy to move money, changing Kenyan society. The system was the first of its kind in the world.

As Stephen Mbugua works on his farm a half-hour drive from the capital Nairobi, his mobile phone beeps. He is getting a text message saying that his son has sent the elderly farmer some money - through the mobile telephone.

Mbugua is a customer of a service called MPESA, offered by a mobile phone company called Safaricom.

People who wish to transfer money through their mobile phones can do so at locations across Kenya.

Stephen MbuguaAnd that is good news for Mbugua, who says the service saves him time and money. "I used to go to Nairobi or to any bank to pay my bills. But right now, since MPESA came, I do not go to Nairobi, I just pay my bill from here," he said.

Phelister Omari, 22, who works in a hospital in Nairobi, is sending money to her mother. She fills out a form with the amount she wishes to send, plugs that amount into her telephone, and gives the clerk the amount plus extra for charges.

People who are sent money go to the agent with their mobile phone, sign a form, and receive the cash.

Phelister OmariOmari says she appreciates the service. "It is very fast. The MPESA, they are available everywhere easy fast payday loans. Once you are going somewhere you can drop and get some cash and you proceed. If there is a problem upcountry, you can save those people. Once you have sent them 1,000 [or] 2,000 (shillings), that is enough for that time," she said.

The MPESA service was launched in Kenya in 2007. Similar services have since been introduced in other countries.

"What MPESA provided is a safe and affordable way of doing this instantly from your phone so you longer have to have a third party," said Betty Mwangi-Thuo, the chief officer of new products for Safaricom.

Having a money transfer system that goes directly from phone to phone is changing Kenyan society.

Sociologist Beneah Manyuru Mutsotso says that, while MPESA has not closed the rich-poor gap, it has allowed people to increase their social and financial status. "One, to own the phone enhances status. Two, the fact that you have money in the mobile phone in a kind of bank in which you have total control, full control, with almost no charges, and the fact that it works almost, I would say, 24 hours. It has no limitations; it has no obstacles and constraints of time or other physical constraints [such as] the fact that you don't have to queue for long," Mutsotso said.

Mutsotso says people no longer have to go without food or other basics if they can reach out for help through the telephone.

 

Kenya Pioneers New Way to Transfer Money

The Chevron Corporation said Wednesday that its vice chairman, John S. Watson, would become chairman and chief executive when David J. O&S217;Reilly retires from those positions at the end of this year.

Mr. O&S217;Reilly, 62, will retire from the company and its board on Dec. 31 after a 41-year career, including 10 years as chairman and chief executive.

Mr. Watson, 52, will be succeeded by George L. Kirkland, 59, as vice chairman, Chevron said. Mr. Kirkland will continue to oversee exploration and production of oil and natural gas.

Mr. Watson, a 29-year Chevron veteran, was elevated to second in command in April. As vice chairman, he oversees areas like strategic planning and government affairs cash advance no fax.

He earned a bachelor&S217;s degree in agricultural economics from the University of California, Davis, and a master&S217;s degree in business administration from the University of Chicago. He has sought to shed unprofitable refineries and focus on oil and gas assets that Mr. O&S217;Reilly amassed through acquisitions and deepwater exploration.

Shares of Chevron, which is based in San Ramon, Calif., fell 59 cents, to $70.32 in trading Wednesday.

Chevron Names Successor as Its Chief Steps Down

WASHINGTON, Sept. 25 (Xinhua) -- Sales of new single-family houses edged up a 0.7 percent in August, following three strong monthly gains, the U.S. Commerce Department said Friday.

New home sales of one-family houses in August were at a seasonally adjusted annual rate of 429,000, according to estimates released by the department.

This represents 0.7 percent above the revised July rate of 426,000, but is 3.4 percent below the August 2008 estimate of 444,000.

Analysts had expected a 1.6-percent rise in August. Sales have so far risen 30.4 percent above their low in January of this year.

The median sales price of new houses sold in August 2009 was 195,200 U.S. dollars. The seasonally adjusted estimate of new houses for sale at the end of August was 262,000. This represents a supply of 7.3 months at the current sales rate online payday loans.

Although many economists expressed disappointment over the tepid increase of new home sales in August, the Commerce Department was optimistic about the prospect of the housing market.

"The rise in new home sales so far this year has sparked an increase in building activity. Residential construction is likely to grow this quarter after 14 consecutive quarterly declines," the department said in a statement.

"We are encouraged by the signs of stabilization in the housing market represented by today's data on new home sales, helped by the strong fiscal and monetary actions that have been taken to stimulate economic growth," it said.

New home sales in U.S. edge up by 0.7% in August

HONG KONG (Reuters) – Asian shares slipped along with commodities on Tuesday in a reversal of the previous day&&9;s solid gains, with many investors sticking to the sidelines and awaiting more clues on whether the economic recovery is picking up steam.

The Shanghai Composite index (.SSEC) slid 3.4 percent as cautious remarks from Chinese Premier Wen Jiabao the previous day stirred worries about the recovery, but the drop had limited fallout on other markets.

Investors showed little reaction to the White House saying that Federal Reserve Chairman Ben Bernanke would be reappointed for another term at the helm of the central bank.

Analysts said that the decision removed uncertainty about the outlook for U.S. monetary policy and was neutral for U.S. assets.

Some analysts had said a decision not to reappoint Bernanke would have been a negative by risking politicizing the Fed chief post at a time when investors fret about record U.S. deficits.

"When you look at responses to last year&&9;s financial crisis, bold action was taken and the market reacted to that favorably," said Takahide Nagasaki, chief FX strategist at Daiwa Securities SMBC in Tokyo.

"I don&&9;t think there will be any major impact, but it should be positive for stock and bond markets in the sense that an element of uncertainty has been removed."

The MSCI index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) dropped 1 percent, with the consumer discretionary and health care stocks the bigger decliners. The index is still up about 47 percent for the year and near an 11-month high struck earlier in the month.

Share trading volumes were very light for a second day running, leading to exaggerated moves across markets.

Japan&&9;s Nikkei average (.N225) shed 0.8 percent after jumping 3.4 percent the previous day, its biggest one-day gain in 3- months.

Foreign investors, which have been increasingly shoving funds back into Japanese shares in the past few weeks, are keeping an eye on Japan&&9;s August 30 general election.

Many are expecting a victory by the opposition Democratic Party but remain hesitant about taking big positions before the see the results.

The dollar dipped against the yen and was down slightly against a basket of currencies, with the yen rebounding after a broad slide the previous day as market players favored riskier assets including higher-yielding currencies.

The dollar shed 0.6 percent to 93.90 yen. The Australian dollar, the highest-yielding of major currencies, dipped 0.2 percent to &&6;0.8354 and dropped nearly 1 percent to 78.45 yen.

Gold prices gained on the dollar&&9;s woes, rising &&6;4.45 an ounce to &&6;945.85. But oil prices pulled back, losing 58 cents a barrel to &&6;73.79 after reaching a 10-month high of &&6;74.81 on Monday.

Safe-haven government bonds popped higher on the retreat in shares and gains in U.S. Treasuries the previous day. September Japanese government bond futures edged up 0.17 point to 139.08 and the benchmark 10-year JGB yield dipped half a basis point to 1.320 percent, back near a five-week low struck last week.

(Editing by Jan Dahinten)

Asia shares and oil retreat in choppy trade

Hot News: In Wake of Bankruptcy, a German Executive Faces Two Inquiries

U.S. software giant Microsoft and Internet company Yahoo have agreed to a partnership both companies hope will change how Internet users search the World Wide Web. The agreement gives Microsoft access to the Internet's second largest search engine. But industry experts say the deal is part of a larger strategy to challenge the dominance of the Internet's biggest search engine - Google. Every time a user goes online, invisible search engines scan billions of bits of information in a process that will ultimately help them decide which Web site to click on. These search engines are patented, complex algorithms worth potentially tens-of-billions of dollars. And, Microsoft, with its search engine, has made it clear it wants a bigger share. A combo made from file photos shows Microsoft Chief Executive Steve Ballmer (L) and Yahoo Chief Executive Carol BartzIn announcing the agreement with Yahoo, Microsoft chief Steve Ballmer said it will challenge Google as the Number One search engine."Right now, there is one company that really dominates that worldwide market for search and online advertising. The partnership we are announcing today will help to create a stronger Number Two, and increase competition in the search area," he said.The agreement between the software giant and popular Internet portal Yahoo combines the second and third ranked search engines in the U.S. to better compete with Google, which, according to online measurement firms, commands more than 65 percent of the global market. CRN online magazine editor Ed Moltzen says the deal is unlikely to unseat Google from its perch, but it could force the Internet giant to blink."If this deal does nothing but force Google to retrench and put their priorities maybe in a little bit different order, this could be considered a success for Microsoft," he said.The deal caps a nearly five-year long pursuit by Microsoft to acquire the Internet pioneer. Last year, Yahoo rejected Microsoft's $47 billion acquisition bid. Analysts say Yahoo has lost some of its luster since then.  Now worth about $22 billion, the company remains profitable, but its revenues have slipped 13 percent since March loans until payday. Yahoo CEO, Carol Bartz says the 10-year deal will boost her company's annual operating income by $500 million, and reduce expenditures by about $200 million."This deal enables us to keep a healthy revenue stream, and invest in areas critical to our future, while Microsoft invests in search technology," he explained.An employee walks past a sign for Bing, Microsoft's recently upgraded search engine, in Redmond, Washington (File)Key to Microsoft's success is gaining a foothold in the lucrative search market. Under the agreement, Microsoft's upgraded search engine, called "Bing", will become the exclusive search technology for Yahoo's Web sites. In return, the California-based company will have the right to sell premium search ads for both companies.CRN's Moltzen says it is a good deal for Yahoo, but an even better deal for Microsoft, which did not have to make an upfront payment to ink the deal."This is an absolute steal for Microsoft. Yahoo wins the ability to stay an independent company, with a huge new friend, a huge new ally in Microsoft, which can help it concentrate on other things where they think they can be more successful," said Moltzen.Despite receiving good reviews for its new search platform, Moltzen says, Microsoft faces an uphill battle with no guarantee of success."So, don't expect anything overnight because of this, but certainly within the next year, hopefully, as we are entering a better period with the economy, we'll start to see some real success or failure coming out of this," he added.The deal is not expected to be finalized until early next year, and not until anti-trust regulators have had time to review its impact on the Internet ad market. For now, investors are not overly impressed. Microsoft shares edged three cents higher after the announcement, while Yahoo shares plunged more than 10 percent.

Microsoft, Yahoo Ink Partnership Deal, Challenge Google

Hot News: Stocks rally hinges on consumers and Fed

LONDON &<51; HSBC Holdings and Barclays reported improved first-half profits on Monday that were largely the result of their investment banking businesses. Yet the banks also set aside a combined $22 billion to cover potentially bad debts as recession and high unemployment led to more retail loans going sour.

The two banks, among the largest in Britain, were the first of a group of European banks, including UBS and Royal Bank of Scotland, to report earnings this week. Some analysts predict that the industry will continue to struggle with write-offs as more clients have trouble repaying their debts in a continuing global downturn.

HSBC&S217;s first-half profit of $3.35 billion was down 57 percent from a year ago. The bank also set aside $13.9 billion in credit risk provisions and said the timing and scale of a recovery in the wider economy remained &S220;highly uncertain.&S221; Profit at Barclays increased 10 percent, to &<63;1.89 billion, or $3.2 billion, after earnings at its investment banking unit almost doubled. But its set-asides reached &<63;4.6 billion.

&S220;The underlying trend is rising bad debts and there are still at least one or two more quarters to come,&S221; said Julian Chillingworth, chief investment officer at Rathbone in London.

HSBC and Barclays joined banks like Credit Suisse and JPMorgan Chase in benefiting from a strong performance by their investment banking units even as loan-loss provisions climbed. Demand for investment banking services rose because more companies were seeking to sell shares and bonds to raise capital.

As it has among Wall Street banks, a divide is forming in Europe between those banks that remained relatively unscathed during the financial crisis and can now grow and benefit from their investment banking services and those that accepted government funds and need to scale back riskier operations.

HSBC and Barclays could expand their investment banking operations while rivals like Royal Bank of Scotland and Lloyds, which accepted government funds, struggled to cut costs and recover from huge losses. Rather than accept government assistance, HSBC conducted a rights offer and Barclays tapped foreign investors to raise capital.

Shares in HSBC gained about 5 percent in London on Monday, and shares in Barclays jumped 7 percent.

The share price of Barclays has more than doubled since the beginning of this year, while HSBC stock is down about 5 percent amid concern about rising loan-loss provisions and its struggling mortgage lending business in the United States.

Rising loan losses among European banks continue to spook investors. Deutsche Bank&S217;s loan provisions of 1 billion euros, or $1 free credit report instantly.4 billion, for the second quarter sent the company&S217;s shares lower even though the bank&S217;s net income rose and revenue from sales and trading at its investment bank unit more than doubled.

Barclays is benefiting from an expansion into investment banking services; it bought Lehman Brothers&S217; American businesses and has been hiring senior bankers in Europe and Asia this year.

Robert E. Diamond Jr., president of Barclays, said Barclays Capital&S217;s expansion was about two-thirds done, but there was more to do in Asia. He expects income from the cash equities and advisory business to continue to grow and said the pipeline for financing, fixed-income and risk management services was &S220;very big.&S221;

Barclays, which said it planned to resume paying dividends before the end of this year, struck a note of caution Monday, predicting that loan losses would continue to go hand-in-hand with unemployment rates.

As bad debts &<51; especially at its ailing American operation &<51; weigh on HSBC&S217;s earnings, the bank stopped offering new loans in March and said that it would review its credit card operations in the United States. HSBC said on Monday that its credit card business was profitable in the first half.

Barclays said profit rose to &<63;1.89 billion in the first half of this year, from &<63;1.72 billion. Impairment charges increased 86 percent, to &<63;4.6 billion, and pretax profit at its British retail business dropped 61 percent. At Barclays Capital, its investment banking unit, earnings rose to &<63;1.05 billion, from &<63;524 million.

HSBC&S217;s personal financial services unit in the United States had a pretax loss of $2.9 billion in the first half, which led to a pretax loss of the global unit of $1.2 billion. But pretax profit at its commercial banking unit rose 49 percent, to $2.4 billion, and earnings at its global banking and markets division, which includes investment banking, rose to $6.3 billion from $126 million.

&S220;We expect the remainder of 2009 to be challenging,&S221; John S. Varley, the Barclays chief executive, said in a statement. &S220;We expect credit market losses to be lower than in the first half but impairment trends to be consistent with those experienced over the first half.&S221;

Stephen K. Green, HSBC&S217;s chairman, was more optimistic when he said that &S220;it may be that we have passed, or are about to pass, the bottom of the cycle in the financial markets.&S221;

Investment Banking Aids HSBC and Barclays Profit

Hot News: Itineraries: Booking Offline

WELLINGTON, Aug. 2 (Xinhua) -- The New Zealand government unveiled ambitious scheme to create new work, education and training opportunities for unemployed young people on Sunday.

In a speech to the annual conference of the National Party in Christchurch, New Zealand Prime Minister John Key announced a 152 million NZ dollars (100 million U.S. dollars) package, which includes 52 million NZ dollars (34.3 million U.S. dollars) for a youth guarantee scheme, Radio New Zealand reported.

Sixteen and 17-year-olds who are not at school will have access to free training in polytechs, wananga or private training establishments.

Key told delegates that the number of unemployed youth has risen from 4,000 last June to 17,000 a year later, and described high and rising youth unemployment as a particular challenge facing the country.

"It is absolutely critical that we provide young people with adequate development opportunities no fax payday loans. If we don't, we risk diminishing the potential of an entire generation of New Zealanders," Key said.

The scheme will start in January. A wage subsidy of 5,000 NZ dollars (3300 U.S dollars) is being offered to employers over a six-month period to take on low-skilled young people.

And 1,200 places are being offered in six-week, military-style training programs in 2010 and 2011.

Key said the government will also provide 4 million NZ dollars (2.64 million U.S. dollars) for new places in summer research scholarships for university students.

He said he expects almost 17,000 young people to benefit from the youth opportunities scheme. ?? Special Report: Global Financial Crisis

New Zealand gov't unveils youth job scheme

Hot News: Green Inc. Column: Governments Can Promote Energy Efficiency

RIO DE JANEIRO, July 31 (Xinhua) -- Vale, Brazil's largest private company, on Friday reported the discovery of hydrocarbons in an exploratory block off Brazil's southeastern coast.

The hydrocarbons were located in the Vampira exploration well in the Santos Basin, Vale said.

The global mining company said traces of light oil and natural gas were found in the Vampira well and that the exact volume will known after further tests.

Vale in May announced the discovery of natural gas in the Panoramix well, also in the same exploratory block fast cash.

Vale has a 12.5 percent participation in the block's exploration consortium. Brazil's state-run oil giant Petrobras has 35 percent, while Spain's Repsol, the block's operator, has 40 percent, and Australia's Woodside has 12.5 percent. Special Report: Global Financial Crisis

Brazil's Vale announces oil and gas discovery

Hot News: Congress tries to extend auto clunkers plan

LONDON (AFP) – European shares rallied Monday after pre-weekend gains on Wall Street and earlier in Asia, boosted by reports of a rescue deal for US lender CIT, analysts said.

In late morning trading, London&&9;s FTSE 100 index of leading shares was up 1.57 percent at 4,457.88 points.

Frankfurt&&9;s DAX 30 climbed 1.55 percent to 5,055.53 points and the Paris CAC 40 gained 1.68 percent to 3,272.59 points nearing the half-way mark.

The DJ Euro Stoxx 50 index of leading eurozone shares added 1.53 percent to 2,507.04 points.

On the foreign exchange market, the European single currency advanced to 1.4226 dollars.

"News of a last-minute deal to save ailing lender CIT has helped to boost index futures ... as European and Asian equities continue their recent charge higher," said dealer Nick Mitchell at CMC Markets.

"It is rumoured that CIT will announce a 3.0-billion-dollar (2.1-billion-euro) deal that was reached late last night with bondholders which saved the company from bankruptcy."

He said "growing optimism surrounding the state of the global economy is helping to continue the recent rally in stocks and increase risk appetite."

US media reported Monday that business lending giant CIT Group, which provides capital for small- and mid-sized businesses, has negotiated an agreement worth 3.0 billion dollars with its bondholders to avoid bankruptcy faxless cash advances.

Citing unnamed "people briefed on the matter," The New York Times said directors of CIT had approved a deal late Sunday with some major bondholders to help it avert a bankruptcy filing.

"CIT is today expected to announce a rescue deal ... an expectation that has helped lift investor confidence further after positive earnings reports from the US last week," said economist Derek Halpenny at The Bank of Tokyo-Mitsubishi UFJ in London.

In Asia, Hong Kong closed 3.7 percent higher at 19,502.37 points on Monday as improved economic outlooks for the US and China sent the benchmark index above the 19,000 level for the first time in 10 months, dealers said.

Financial markets in Japan were closed Monday for a public holiday and were to reopen Tuesday.

Before the weekend, US stocks closed mostly higher Friday as investors digested surprisingly good earnings reports from big companies.

The Dow Jones Industrial Average rose 0.37 percent to 8,743.94 points, extending a blue-chip rally to a fifth straight day.

The technology-heavy Nasdaq edged up 0.08 percent to 1,886.61, while the broad Standard & Poor&&9;s 500 index dipped 0.04 percent to 940.38.

European shares shoot higher on CIT rescue report

Hot News: CIT Obtains Loan to Avert Bankruptcy

DETROIT (Reuters) – A new General Motors emerged from bankruptcy protection on Friday -- far more quickly than most industry watchers had expected -- as a leaner automaker pledging to win back American consumers and pay back taxpayers.

A whirlwind 40-day bankruptcy for GM concluded with the closing of a deal that sold key operations to a new company majority-owned by the U.S. Treasury.

The development, which follows a similar fast-track reorganization of Chrysler, represented a victory for the Obama administration and its commitment to save jobs and prevent a liquidation of the largest U.S. automaker.

At the same time, the U.S. government has taken on substantial new risks as a 60 percent owner of the new GM with a &&6;50 billion equity investment and &&6;10 billion in debt and perpetual preferred shares.

Analysts said the government intervention had given GM a new chance and sharply lower operating costs, but left management facing deep challenges given the weak economy and GM&&9;s long-running slide in market share.

"I wouldn&&9;t really call it a new GM, it is just a smaller GM. That would be more of an apt description. They still have a lot of hurdles to jump," said Mirko Mikelic, portfolio manager at Fifth Third Bank. "Right now, they are in a survival mode."

Chief Executive Fritz Henderson said the new company would shed layers of management, make decisions faster and shed the bureaucracy that critics say contributed to the failure of the 100-year-old automaker.

The company&&9;s white-collar workforce will be cut by more than 20 percent by eliminating 6,000 jobs. Executive ranks will be cut 35 percent.

NO MORE BUSINESS AS USUAL

"The bottom line is that business as usual -- and as we have had it until today -- is over," Henderson told reporters at GM&&9;s Detroit headquarters. "Everyone associated with GM must be prepared to change -- and fast."

Bankruptcy slashed GM&&9;s debt and healthcare obligations and brought down labor costs to be on par with Japanese competitors led by Toyota Motor Corp.

The new GM will have slashed its debt and healthcare obligations by &&6;48 billion, dropped almost 40 percent of the dealers from an unprofitable network and moved to sell laggard brands such as Saab, Saturn and Hummer.

Analysts said that gives GM a chance to deliver on its commitment to launch more fuel-efficient cars and to focus its resources on fewer brands, models and dealerships.

"The challenge in the future is how to approach a marketplace that has been burned by GM," said Pete Hastings, a fixed-income analyst at Morgan Keegan.

While key assets and the Chevrolet, Cadillac, Buick and GMC brands were sold out of bankruptcy to form the new General Motors Company, other assets, including shuttered factories, remain in bankruptcy for a liquidation process personal loans for bad credit.

That old GM, which will become Motors Liquidation Co, is expected to stay in bankruptcy for years.

Bondholders, who had been owed &&6;27 billion, could eventually receive a 10 percent stake in the new GM.

The U.S. Treasury will own 60.8 percent and 11.7 percent will be owned by the governments of Canada and Ontario. A retiree trust fund affiliated with the United Auto Workers union will hold 17.5 percent.

GM will start to pay back its debt to the U.S. Treasury, which it owes by 2015, as soon as possible, Chief Financial Officer Ray Young told Reuters Television in an interview.

The automaker plans an initial public offering as soon as 2010 and could use some of the proceeds from that stock sale to repay government debt, Young said.

NEW GM, NEW CULTURE?

Henderson, who took over as CEO when predecessor Rick Wagoner was ousted by the Obama administration at the end of March, said the company would be run by a single executive committee, cutting the number of top decision-makers in half.

He also said key decision-makers would meet weekly, a practice adopted by Ford Motor Co CEO Alan Mulally that he has credited with speeding that automaker&&9;s turnaround.

GM also eliminated the North American executive team overseeing operations in its troubled home market, which had caused the automaker to lose more than &&6;80 billion since 2005.

Nick Reilly, who has headed Asian operations, will take control of GM&&9;s international operations based in Shanghai, a recognition of the growing importance of China at a time when GM is selling its European unit, Opel.

Bob Lutz, 77, GM&&9;s outspoken and high-profile former product chief, agreed to stay in a new position with responsibility for marketing, communications and a continued role in vehicle design.

Barclays Capital analyst Brian Johnson said Henderson&&9;s maneuvers in part dismantled organizational forms that were a hallmark of Wagoner&&9;s tenure.

"The organizational steps GM announced are, in the context of the GM culture, relatively significant, even as they appear inscrutable to outsiders," Johnson said.

GM&&9;s exit from bankruptcy in 40 days followed a path blazed by Chrysler that culminated in an asset sale that gave control of the smaller automaker to Italy&&9;s Fiat SpA.

Ford has avoided seeking emergency U.S. government loans. Ford shares closed up 1.6 percent at &&6;5.72 on Friday. The stock has nearly tripled since hitting a low in early February.

(Reporting by Kevin Krolicki; additional reporting by Caroline Humer and Jui Chakravorty Das; editing by Patrick Fitzgibbons, Lisa Von Ahn and Matthew Lewis)

GM exits bankruptcy

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A federal jury ruled on Tuesday that Maurice R. Greenberg, the former chief executive of the American International Group, did not wrongly seize $4.3 billion in company stock.

The eight-member jury rejected a contention by A.I.G. that Mr. Greenberg had improperly removed the stock from a fund for top performers&S217; retirement benefits. He was therefore not required to reimburse the company, the jury concluded, deciding the first of two questions at trial.

In a second, advisory decision, the jury found that Mr. Greenberg did not violate a trust when he removed the stock. The federal judge presiding over the trial, Jed S. Rakoff, will now write the controlling decision on whether a trust was violated, taking the jury&S217;s finding into account.

&S220;I will make my own findings of fact and consultations of law,&S221; said Judge Rakoff, of the United States District Court for the Southern District of New York. He said he would issue his decision by the end of August.

Judge Rakoff could still reverse the jury on the question of breach of a trust, and, if so, demand that Mr. Greenberg and a company he controls, Starr International, take steps to correct the breach.

A.I.G. issued a statement saying: &S220;We are disappointed by the jury&S217;s verdict and we await the court&S217;s final ruling. We continue to believe in the merits of our case.&S221;

The giant insurer had initially hoped to get money back from Mr. Greenberg and use it to create a new employee compensation plan. As the trial began in June, however, A.I.G. said that it would instead use any recovery to pay back its government bailout loans.

Starr International issued a statement on Tuesday through a spokeswoman, Liz Bowyer, saying: &S220;We are gratified by the jury&S217;s quick and complete vindication of Starr International and Mr. Greenberg, and the jurors&S217; quick and complete rejection of the outrageous personal attacks on Mr. Greenberg&S217;s character by A.I.G. and its counsel.&S221;

The jury&S217;s decision in the case came just one day after the two sides gave their closing arguments, while Mr. Greenberg, 84, sat in the courtroom hearing himself described as either a brazen liar who had fabricated evidence or a law-abiding businessman. The seven women and lone man of the jury had listened to three weeks worth of highly technical evidence, dealing with the intricate corporate structures Mr. Greenberg had built to hold his far-reaching family of insurance businesses, charitable trusts, foundations and other special-purpose entities.

At its height, A.I.G. was the largest insurance conglomerate in the world, and the rich retirement plan at the heart of the lawsuit was considered an important factor behind its phenomenal growth. At the beginning of the trial, Judge Rakoff ruled out any discussion before the jury of A cash advances.I.G.&S217;s collapse and subsequent $182 billion government bailout, which happened after the main events in the lawsuit.

The case revolved around A.I.G.&S217;s highly unusual retirement plan, which for 35 years was operated by Starr International, an independent offshore company that is A.I.G.&S217;s largest shareholder. Most companies run their own retirement plans, but A.I.G. trusted Starr International to compensate its top performers because the two companies were governed by nearly identical boards, both controlled by Mr. Greenberg.

The problems began in 2005, when Mr. Greenberg was forced out as chief executive of A.I.G. while that company was being investigated for accounting irregularities. Mr. Greenberg was still in charge of Starr International, and in that capacity he ended the A.I.G. retirement plan and removed the stock, selling it for $4.3 billion.

Theodore Wells Jr., the lead lawyer representing A.I.G., tried to persuade the jury that this was unlawful because the stock was held in a trust. He said Mr. Greenberg had altered documents to make it look as if he had had the legal right to end the retirement plan and divert the assets to his own purposes.

Mr. Greenberg and his lawyers responded that the stock had not been in a trust for employee compensation. They said that a trust did exist at Starr International, but it was for charity. They produced a great deal of documentation for the charitable trust.

A.I.G., meanwhile, showed videos of Mr. Greenberg telling his employees that valuable shares were &S220;held in trust&S221; for them, but could not produce legal documents like the ones for the charitable trust. Mr. Greenberg, on the witness stand, scoffed at the videotapes as motivational speeches with no legal significance.

David Boies, the former federal prosecutor who led Mr. Greenberg&S217;s legal team, said after the verdict Tuesday that he believed A.I.G.&S217;s inability to produce legal documents for a compensation trust damaged its credibility with the jurors. He also said he thought the trial&S217;s fog of complexity had suddenly cleared up on the last day, when both sides gave their closing arguments to the jury.

Mr. Wells had urged the jurors not to get bogged down in evidentiary intricacies but to draw on their instincts for determining whether Mr. Greenberg was lying or telling the truth.

&S220;I think that helped avoid a hung jury, because it really presented a very simple question,&S221; Mr. Boies said. &S220;Everybody who tries lawsuits believes that juries are very good at judging credibility.&S221;

Jury Decides For Greenberg In A.I.G. Case Over Shares

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HONG KONG &S212; Companies in Japan and Germany may have become less gloomy about their prospects in recent months, as surveys showed Monday, but neither they nor businesses elsewhere have much to cheer about as the world economy remains mired in a recession that could see it shrink by about 2.9 percent this year.

Forecasts from the World Bank on Monday highlighted just how painful the recessions will be in various regions, despite mounting signs that the very worst of the downturn may be over.

The bank earlier this month said it expected a deeper global recession, forecasting a 2.9 percent contraction in gross domestic product for this year, rather than 1.7 percent, as it projected as recently as March.

More detailed forecasts released Monday showed that much of this pain will be in high-income areas like the euro zone, the United States and Japan. The bank said that it expected economies in high-income nations to contract a total of 4.2 percent this year.

It expects the U.S. economy to shrink 3 percent and the euro zone 4.5 percent, rather than the 2.4 percent and 2.7 percent it forecast in March. For Japan, the World Bank now projects contraction of as much as 6.8 percent this year &S212; significantly higher than the 5.3 percent it forecast three months ago.

A survey of big Japanese manufacturers released by the government Monday showed sentiment improving in the April-to-June period, to minus 13.2, from minus 66.0 during the previous quarter. And in Germany, the closely watched Ifo business confidence index rose for the third consecutive month in June, to 85.9 from 84.3 in May.

Both readings echoed other encouraging data from around the world in recent weeks that show the pace of decline is at least slowing, but they fall well short of showing actual recovery at this stage, economists caution.

The World Bank&S217;s forecasts Monday echoed this caution: &S220;While the global economy is projected to begin expanding once again in the second half of 2009, the recovery is expected to be much more subdued than might normally be the case,&S221; the bank said in its report. &S220;Unemployment is on the rise, and poverty is set to increase in developing economies, bringing with it a substantial deterioration in conditions for the world&S217;s poor.&S221;

Likewise, the chief economist of the International Monetary Fund, Olivier Blanchard, said Monday that the U.S. economy would see a sustainable recovery only if exports rose substantially, and that this might require an adjustment in the dollar&S217;s exchange rate.

Developing nations will still see growth in 2009, the World Bank said, but this will be slim &S212; 1.2 percent overall, after 8.1 percent in 2007 and 5.9 percent in 2008 &S212; mainly because of the dynamic economies of China and India. Stripping out those two countries, where growth is expected to be 7.2 percent and 5.1 percent in 2009, developing nations will contract 1.6 percent, the bank projects.

Economies in Brazil and Russia &S212; the other two nations in the so-called BRIC quartet of large, and once fast-growing, developing nations &S212; are expected to shrink by 1.1 and 7.5 percent, respectively. The bank had previously expected Brazil to eke out 0.5 percent growth this year, and Russia to shrink by 4.5 percent.

Developing nations have been hit hard by plummeting demand for their exports in the United States and Europe. The recession and financial-market fragility also has caused private capital inflows to developing countries to fall drastically, to $707 billion in 2008, from a peak of $1.2 trillion in 2007, the World Bank said Monday.

Emerging Europe and central Asia have been hit hardest by the crisis, as many countries there had large current account deficits and were especially vulnerable to the abrupt drop-off in capital flows and exports the crisis brought.

GDP in these regions is projected to fall by 4.7 percent in 2009, recovering to grow by about 1.6 percent in 2010.

Many parts of developing Asia suffered mainly because of collapsing exports, but South Asia and the East Asia and Pacific regions are forecast to grow 4.6 percent and 5 percent, respectively.

The World Bank expects global growth to rebound to 2 percent next year and 3.2 percent by 2011. In developing countries, growth is expected to be higher, at 4.4 percent in 2010 and 5.7 percent in 2011.

World Bank Cuts Forecast for Developed Economies

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