CHICAGO, Oct. 29 (Xinhua) -- Gold futures on the COMEX Division of the New York Mercantile Exchange rallied to a 3-day high on Thursday as a dropping dollar refueled gold's demand of hedge. Silver and platinum both rose.

The most active gold contract for December delivery soared 16.60 U.S. dollars, or 1.6 percent, to finish at the highest level of 1,047.10 dollars an ounce in recent 3 sessions. After a 4 session rally, dollar saw its first drop in recent 5 sessions on Thursday, dragged by a higher-than-expected GDP report.

The commerce Department said the U.S. GDP grew unexpectedly by 3.5 percent on an annual basis in the third quarter, ending a streak of declines over four quarters. This made investors more interested in high risk currencies for more profits.

By the end of gold floor trading time, the dollar index, a gauge measuring the greenback's value against a basket of major currencies, dropped 0 overnight pay day loans.52 to 76.065, raising gold's demand of hedge and haven.

Surging energy prices also helped the precious metal end higher.Pushed by dollar's sharp declines, the benchmark crude contract for December delivery in New York rose 2.67 dollars and returned above 80 dollars a barrel when gold closed.

December silver was up 41.5 cents to 16.655 dollars per ounce. January platinum gained 31.30 dollars to 1338.20 dollars an ounce.

Gold bounces to 3-day high as dollar weakens on GDP report

HONG KONG &S212; When the Hong Kong government eliminated a 40 percent tax on wine last year, oenophiles, importers, retailers and entrepreneurs popped open the bubbly. Then they quickly got down to business.

Auction houses rushed to hold multimillion-dollar sales. Neighborhood wine shops, classes, tastings and workshops appeared where there had been none before. Jeannie Cho Lee, a Master of Wine, is releasing her first book, &S220;Asian Palate,&S221; here next month.

And two major wine expositions were organized, with two more on the way: The Hong Kong International Wine and Spirits Fair in the coming week and Vinexpo Asia-Pacific next spring.

Give this city a 40 percent price cut, and it runs with it.

Wine imports soared 80 percent in the 12 months after the tax was dropped, in February 2008, to a total of 3.2 billion Hong Kong dollars, or about $400 million, according to the Hong Kong Trade Development Council. As a comparison, mainland China, with a population of 1.3 billion, imported $184 million worth of wine in 2007, though that number is expected to grow.

Although some of these enterprises might find success elusive because of the hard economic times or the sudden saturation of the market, the heightened interest in wine is palpable.

Two new companies in particular are taking novel approaches to wine-related services here.

At the top end of the market is Sarment, which started a custom sommelier service in Hong Kong and London in May.

A quirkier enterprise is The 8th Estate Winery, which is not going to let a little inconvenience &S212; the fact that Hong Kong has little arable land and no vineyards &S212; get in its way. Using imported flash-frozen grapes, it presses, ferments, ages and bottles its own wines in a Hong Kong high-rise. It opened for business in December 2008, and most of its wines are becoming ready now.

Sarment offers round-the-clock, individual access to top sommeliers to a small number of clients. It offered 25 memberships this year, of which 18 have been reserved, and is planning to have no more than 450. There is a membership fee of &<63;50,000, or $83,000, plus a &<63;12,000 annual fee.

The service employs four sommeliers, all of whom have worked at restaurants with two- or three-star Michelin ratings.

&S220;It&S217;s very much one-on-one service,&S221; said Niels Sherry, the company&S217;s managing director, during a trip to Hong Kong from London, where he is based. &S220;Our sommelier will visit you in your home, look at your cellar and make suggestions. If someone was in a restaurant and couldn&S217;t decide between the &S217;95 and the &S217;96, he could text one of our experts.&S221;

&S220;Some people are going to enjoy pulling out their phone and saying, &S216;I&S217;m going to call my sommelier!&S217; Others will be more discreet,&S221; he said.

While limited in number, the clientele varies greatly.

&S220;Some clients have thousands of bottles. Another has just finished a new house and has no bottles. He wants us to help him start from scratch,&S221; Mr guaranteed fast personal loans. Sherry said. &S220;We have older, experienced collectors, as well as newer wine lovers, especially from China and Russia.&S221;

Philippe Messy, a sommelier based in London and one of Sarment&S217;s co-founders, said he wanted to push clients past &S220;just Lafite-Rothschild and P&>33;trus.&S221;

&S220;We learn about your tastes and requirements, and then we challenge you,&S221; said Mr. Messy, who was also visiting Hong Kong.

He also said the service could help oenophiles, particularly in burgeoning markets like Hong Kong, from getting carried away by the frenzy of buying and selling.

&S220;We see bottles going for auction here in Hong Kong, selling for three times the estimated price,&S221; Mr. Messy said. He added that Sarment was able to secure hard-to-find bottles directly from winemakers and collectors all over the world.

But the company does not allow its employees to sell wines or to charge a commission on any sale. &S220;We are not wine merchants,&S221; said Richard Green, managing director for Asia. &S220;We&S217;re unbiased.&S221;

Mr. Sherry said one client was recently offered a bottle of Louis XII Black Pearl cognac for &S364;60,000. A Sarment sommelier advised that it was worth far less, and the deal fell through.

The bottles at a recent tasting at The 8th Estate, named in part because eight is a lucky number in Chinese culture, were significantly less expensive, averaging about 250 Hong Kong dollars, or $30.

Its 2007 vintage, made of grapes from Washington State, yielded whites, reds and dessert wines. The 2008 grapes were mostly from Italy. The company is looking at Australian harvests for future vintages.

Dozens of visitors, mostly from Hong Kong and wielding digital cameras, milled around rooms filled with oak barrels and lit with chandeliers.

Lysanne Tusar, a director at the winery, said that most of its initial sales had been of the finished product. Customers liked the novelty of having a wine made in the urban center of Hong Kong.

But their goal is to sell custom wines to serious wine lovers by the barrel. The price of a barrel, which yields at least 280 bottles, starts at 66,000 Hong Kong dollars.

&S220;With the advice of our winemaker, you can create your own,&S221; Ms. Tusar said. &S220;You can mix varietals, you can customize your own label. It&S217;s very popular with corporations, weddings or as an anniversary gift.&S221;

Their grapes are shipped to a 1,100-square-meter, or 12,000-square-foot, warehouse in Hong Kong, where they are thawed, fermented, pressed, fermented again and aged in oak barrels from 6 to 30 months.

Representatives from The 8th Estate and Sarment said they had started planning their companies even before the wine tax was scrapped.

&S220;We already felt, several years ago, that Hong Kong would be a good opportunity,&S221; Mr. Sherry said.

Hong Kong Love of Wine Finds New Outlets

WASHINGTON, Oct. 29 (Xinhua) -- The U.S. economy rose at a pace of 3.5 percent in the third quarter after four consecutive quarters of contraction, reported the Commerce Department on Thursday.

The increase is better than economists' expectation of 3.3 percent, indicating the strongest signal that the worst recession since the 1930s has ended.

The growth of real gross domestic product (GDP) -- the output of goods and services produced by labor and property within U personal loan for poor credit.S. borders -- in the July to September quarter was mainly propelled by the government's economic stimulus package.
Special Report: Global Financial Crisis

U.S. economy rises 3.5% in third quarter

Stocks fell on Wednesday as investors digested gloomy numbers on new-home sales and were unmoved by a report that showed a rise in United States durable goods orders.

The number of newly constructed homes with committed buyers was put at a seasonally adjusted annual rate of 402,000, the Commerce Department said, falling short of the 440,000 projected by economists. That marked a decrease of 3.6 percent in projected sales from August to September &<51; the first drop in five months. Analysts had expected new-home sales to increase by 2.6 percent, encouraged in part by a economic recovery program that awards first-time home buyers an $8,000 tax credit.

New-home sales have implications for the construction job market as well as consumer spending on items like furniture and appliances.

Stocks were down all day, but selling accelerated in the final hours of trading. By the end of the day, the Dow Jones industrial average was down 119.48 points, or 1.21 percent, at 9,762.69. The Standard &&8; Poor&S217;s 500-stock index was off 1.95 percent to 1,042.63 and the Nasdaq was 2.67 percent lower at 2,059.61. Stocks in energy companies and those producing materials like metals and paper goods drove the decreases.

Josh Shapiro, chief United States economist for MNR, a financial advisory firm, said the housing data showed that recovery would be slow and that housing prices might fall again.

&S220;It&S217;s still a very dicey environment,&S221; he said. &S220;There&S217;s still a lot of looming supply out there, particularly in the upper and middle price range.&S221;

The government released a report showing a 1 percent rise in orders for durable goods in September &<51; the second increase in the last three months. The jump met expectations, but total orders were still down 24.1 percent compared with a year ago, a sign that economic renewal may be slow to materialize.

Durable goods, which include long-lasting items like refrigerators and planes, offer a window into the health of the manufacturing industry and provide a preview of how busy factories will be in the months ahead free credit report instantly. Increases in durable goods orders can lead to more jobs and are considered central to the growth of the economy.

Some analysts discounted the importance of the durable-goods numbers, saying the increase was largely anticipated and not market-shaking. But Cliff Waldman, an economist for the Manufacturers Alliance/MAPI, an economic research group, said the data suggested manufacturing would be slow to take off again.

&S220;It paints a clear picture of a weak-kneed recovery,&S221; he said. &S220;There&S217;s no aggressive, entrepreneurial, animal-spirits kind of investment.&S221;

Financial stocks were down slightly as news that GMAC Financial Services was seeking a third round of bailout financing from the United States government spread through the market.

At the close of trading, the price of crude oil was at $77.26 a barrel, down from $79.55 on Tuesday.

Traders were looking ahead to Thursday, when the government will report gross domestic product figures, which provide a hint of how quickly the economy is growing by measuring the total value of all goods and services in the economy. Wall Street analysts are expecting an annual growth rate of 3.2 percent, although on Wednesday, Goldman Sachs slashed its projection to 2.7 percent from 3 percent.

Overseas, the Nikkei stock average in Japan closed 1.35 percent down at 1,0075.05. European markets also tumbled, with the FTSE 100 in London ending down 2.32 percent, the DAX in Germany index falling 2.46 percent, and the CAC-40 in France closing down 2.14 percent.

Stocks Decline on Economic News

European markets were pushed higher by oil stocks Tuesday after BP&S217;s third-quarter results beat analysts&S217; expectations. Asian indexes closed lower, following losses on Wall Street the previous day amid fears that equities have become overvalued.

On Wall Street, stock futures were little changed ahead of Tuesday&S217;s opening as investors prepared for new reports on home prices and consumer confidence.

In afternoon European trading, Britain&S217;s FTSE 100 rose 0.5 percent to 5,215.48, Germany&S217;s DAX added 0.2 percent to 5,655.26 and France&S217;s CAC 40 climbed 0.4 percent to 3,760.88.

Major Asian markets dropped by around 2 percent or more, with shares in resource companies hit after a steep fall in commodity prices.

In London, BP gained 4 percent after it reported a 34 percent fall in third-quarter profit to $5.3 billion, as oil and gas prices fell from record levels a year earlier.

The figure from Europe&S217;s second-largest oil company compared with an $8 billion profit in the third quarter of 2008, but was up from $4.4 billion in the second quarter and well ahead of analysts&S217; forecasts.

&S220;The fall in earnings was well trailed, but the numbers nonetheless have obliterated market forecasts, as evidenced by the spike in the share price in early trade,&S221; said Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers.

Two other oil stocks, Total and Shell, added 2.1 percent and 1.4 percent respectively, partly offsetting weakness in financials.

In Asia, investors unloaded shares after American markets got pounded as the dollar strengthened and anxiety grew about the market overheating, given the troubles still facing major Western economies and a number of financial companies free instant credit reports.

Some analysts said the markets, up massively since March, could get more choppy even if they continued to advance.

&S220;The market has gotten high enough, so there&S217;s some profit-taking right now,&S221; said Francis Lun, general manager of Fulbright Securities in Hong Kong. &S220;The summer rally seems to be over, and I think we&S217;re facing a cold winter.&S221;

In Japan, the benchmark Nikkei 225 stock index lost 1.5 percent to 10,212.46 points. Hong Kong&S217;s market, which was closed Monday, dropped 1.9 percent to 22,169.59.

China&S217;s Shanghai market led Asia&S217;s declines, tumbling 2.8 percent to 3,021.46. Australia&S217;s market lost 1.6 percent and India&S217;s Sensex was 2 percent lower.

South Korea&S217;s Kospi shed 0.5 percent to 1,649.53 a day after new figures showed the country&S217;s economy, Asia&S217;s fourth largest, expanded at its quickest pace in seven years in the last quarter.

Oil prices lingered below $79 a barrel Tuesday in Europe after three days of losses as investors eyed a volatile dollar. Benchmark crude for December delivery rose 28 cents to $78.96; the contract fell $1.82 overnight.

Oil Stocks Push European Markets Higher

Hot News: Autopsy Finds Madoff Investor Drowned After Heart Attack

NEW YORK (Reuters) – Verizon Communications Inc&&9;s (VZ.N) third-quarter profit fell a less-than-expected 9 percent as it added more wireless customers than analysts had forecast.

While Verizon Wireless lost some market share to AT&T Inc (T.N), the exclusive U.S. provider for Apple Inc&&9;s (AAPL.O) iPhone, said its 1.2 million net customer additions was ahead of the average estimate of 1 million customers from five analysts contacted by Reuters.

"(Verizon) certainly did see some pressure from iPhone in the quarter but it&&9;s tough to complain about 1.2 million net adds," said Stifel Nicolaus analyst Chris King.

In comparison, AT&T added 2 million customers in the third quarter. Verizon Communications owns 55 percent of Verizon Wireless, while Vodafone Group Plc (VOD.L) owns the remaining stake.

Verizon&&9;s profit fell to &&6;2.89 billion, or 41 cents per share, from &&6;3.2 billion, or 59 cents a share, in the same quarter a year earlier. Excluding one-time items, earnings were 60 cents per share, compared with the average analyst estimate of 59 cents per share, according to Thomson Reuters I/B/E/S auto loans for bad credit.

Revenue rose 10.2 percent to &&6;27.27 billion from &&6;24.75 billion in the year-earlier quarter, helped by its purchase earlier this year of rural mobile operator Alltel.

Analysts had expected revenue of &&6;27.17 billion. On a pro forma basis, as if Verizon had owned Alltel last year, revenue would have risen 0.6 percent.

Verizon added 191,000 FiOS television customers in the quarter, bringing its customer base to 2.7 million. This was well below King&&9;s expectation for 250,000, suggesting increasing competition in the quarter.

"Certainly cable was a little more aggressive in the third quarter," King said.

Verizon&&9;s Chief Executive Ivan Seidenberg said that the company would improve with the economy.

Shares were up 14 cents to &&6;28.99 in premarket trading.

(Reporting by Sinead Carew; Editing by Derek Caney)

Verizon profit falls, wireless subscribers beat

SAN FRANCISCO (Reuters) – Billionaire activist investor Carl Icahn gave up his seat on the Yahoo Inc (YHOO.O) board of directors on Friday, closing a tumultuous chapter in the Internet company&&9;s 15-year history.

Icahn said in a letter to the board he did not believe Yahoo needed an activist investor as a director at this time, and that his attention was focused on other matters. The letter said his resignation was effective immediately.

Icahn won his seat on the board in July 2008, in the wake of Yahoo&&9;s protracted -- and ultimately fruitless -- talks with Microsoft Corp (MSFT.O), which had offered &&6;47.5 billion to buy Yahoo.

Yahoo CEO Carol Bartz in January replaced Jerry Yang, who had rebuffed the software giant&&9;s offer. Instead, Yahoo and Microsoft announced a 10-year search partnership in July, in which Yahoo will use Microsoft&&9;s back-end search technology on its Web portal.

In his letter, Icahn said he believed the Microsoft transaction would provide great long-term benefits to Yahoo and commended Bartz on a great job.

A Yahoo spokeswoman said on Friday there were no immediate plans to find a replacement for Icahn, and that the board would operate with 11 directors for the time being.

"Carl has been an important member of our board and has helped us through some significant transitions," Yahoo Chairman Roy Bostock said in a statement. "We are all grateful for his active role shaping the future of Yahoo."

Shares of Yahoo were off 25 cents at &&6;16.97 in after hours trade.

Icahn is chairman of Icahn Associates and currently sits on the boards of several companies including Blockbuster Inc (BBI car loans for people with bad credit.N) and American Railcar Industries Inc (ARII.O).

ICAHN PROUD

He owned 62.8 million shares for a roughly 4.5 percent stake in Yahoo as of August 31, according to Reuters data. Icahn amassed the bulk of his Yahoo stake in May 2008, according to media reports at the time, when shares of the company were trading in the low- to mid-&&6;20 range.

After Yahoo rejected Microsoft&&9;s offer that spring, Icahn mounted a proxy contest to try and oust the Yahoo directors, eventually reaching a settlement that gave Icahn and two of his handpicked director nominees seats on the company&&9;s board.

"When I joined the board, the company was in a state of turmoil. In the period since then, we have all worked together to achieve much for the company, most notably bringing Carol on to be the CEO and then consummating the search deal with Microsoft," Icahn said in his letter.

"I am proud to have played a role in both these decisions."

Yahoo has said the search deal with Microsoft, which is awaiting regulatory approval, will allow it to save &&6;425 million in operating expenses and enable them to mount a more effective challenge to search leader Google Inc (GOOG.O).

Last week, Yahoo reported its third-quarter net income tripled thanks to cost-cutting and asset sales.

Icahn sold nearly 13 million Yahoo shares between August 27 and August 31 at prices ranging from &&6;14.75 to &&6;14.92, according to an SEC filing.

(Editing by Edwin Chan; editing by Carol Bishopric)

Carl Icahn quits Yahoo board, commends CEO

CHICAGO (Reuters) – Federal prosecutors in the Galleon Group case have sent a subpoena to a former employee of Steven A. Cohen&&9;s SAC Capital Advisors, a sign that the scope of the problem into the largest hedge fund insider trading case in history is expanding, the Wall Street Journal reported, citing people familiar with the matter.

The subpoena seeks trading records from a former SAC hedge fund manager, Richard Grodin, who employed a cooperating witness in the insider trading case announced last week, the Journal said.

The Journal reported that the subpoena does not suggest wrongdoing. Nor does it suggest that Cohen -- one of the nation&&9;s most well known and successful hedge-fund managers -- has been implicated in the scandal.

Galleon and SAC Capital could not be immediately reached to comment.

Last week, federal investigators brought criminal charges against Galleon founder Raj Rajaratnam and five others in the largest hedge fund insider trading case in history pay day advance.

Galleon, which managed &&6;3.7 billion at the end of last week and boasted strong returns through September, has told investors it will wind down its funds.

The trading scandal has also entangled big names such as Intel Corp, consulting firm McKinsey & Co, IBM, and rating agency Moody&&9;s.

According to regulators&&9; complaints, an employee at investor relations firm Market Street Partners tipped off a Galleon informant in July 2007 that Google Inc&&9;s earnings would be below market expectations.

Galleon traded on that information, netting a profit of &&6;9 million, the biggest illegal trades identified in the complaints, which said a total of &&6;20 million had been made by trading on nonpublic information.

(Reporting by Lisa Shumaker, Editing by Sandra Maler)

Probe widens in Galleon case to SAC Capital: report

BOSTON (Reuters) – Diversified U.S. manufacturer Honeywell International Inc (HON.N) posted a 15 percent profit drop that was far less severe than analysts had forecast, sending its shares higher in light premarket trading.

The world&&9;s biggest maker of cockpit electronics on Friday reported third-quarter profit of &&6;608 million, or 80 cents per share, compared with &&6;719 million, or 97 cents per share, a year earlier.

Earnings were boosted 4 cents per share by a lower-than-expected tax rate, though the company expects that to be offset in the fourth quarter.

Revenue fell 17 percent to &&6;7.7 billion.

Analysts, on average, looked for profit of 72 cents per share on &&6;7.88 billion in revenue, according to Thomson Reuters I/B/E/S.

Its shares rose 2.3 percent to &&6;39.40 in premarket trading.

Honeywell held its full-year profit target steady at &&6;2.85 per share.

For the year, Wall Street expects profit of &&6;2.78 per share.

The Morris Township, New Jersey-based company has faced declining demand for its thermostats and other control systems as commercial construction has slowed around the world payday loans no fax. Its aviation unit has also been hit by declining air travel.

Honeywell has twice this year cut its profit forecast, first in April and again in July. As of July it expected to earn &&6;2.85 per share for the year, well below its December forecast of &&6;3.20 to &&6;3.55 per share.

Much of corporate America revised its earnings targets in the first half of 2009, as it scrambled to keep up with a downturn that was faster and more severe than many executives had anticipated.

Its competitors include United Technologies Corp (UTX.N) in aerospace and building control systems, Goodrich Corp (GR.N) in aviation and DuPont Co (DD.N) in specialty materials.

So far this year, Honeywell shares are up about 13 percent, lagging the 14 percent rise of the Standard & Poor&&9;s capital goods industry index (.GSPIC).

(Reporting by Scott Malone; Editing by Derek Caney)

Honeywell profit tops Street view, shares up

NEW YORK (Reuters) – U.S. Senator Charles Schumer on Tuesday jumped in to the debate over anonymous trading venues known as dark pools, calling for tough new regulations a day before the U.S. Securities and Exchange Commission meets to consider new rules.

Schumer, among the most vocal of lawmakers pressing for market structure reform, urged in a letter to SEC Chairman Mary Schapiro that the regulator adopt some of the most robust measures now on the table, and called for a new market-wide monitor.

He said the growth of dark pools, which now number more than 40, risks undermining fair and transparent markets, and that regulation has not kept pace. The private venues are used primarily to trade large blocks of stock, and have proliferated this decade as the marketplace went electronic.

"We want to keep them in existence ... but we want a much more level playing field, which is what we don&&9;t have right now," Schumer said on a media conference call, adding the fragmented market "compromises the ability of regulators to monitor and enforce such abuses as front running and market manipulation..."

Dark pools, the largest of which are run by banks such as Goldman Sachs (GS.N) and Credit Suisse (CSGN.VX), account for an estimated 10 to 15 percent of overall U.S. equity volume.

The SEC meets Wednesday to consider proposals for changes that are expected to shed more light on the venues, including requiring them to display more quotes and publicly reveal more data on volumes.

The industry also expects more clarity on whether actionable indications of interest, or IOIs, which dark pools and exchanges use to communicate, should be treated as quotes.

Schumer said all actionable IOIs should be treated as quotes, which would effectively kill them, and that the threshold beyond which dark pools must display quotes should be dropped from 5 percent to 1 percent.

He also called on the SEC to consider real-time reporting of dark pool trades to the consolidated tape -- a measure that many expect, but that some warn could hamper institutions&&9; ability to execute big, complicated orders free insurance quotes.

Schumer made a splash this summer when he called for the elimination of so-called flash orders, which some exchanges sent to specific market players before routing them to the wider market. The SEC last month proposed to ban flashes.

ANTICIPATING NEW RULES

NYSE Euronext (NYX.N), which runs the New York Stock Exchange and participated in Schumer&&9;s conference call, on Tuesday said it would begin next month offering a means by which dark pools and broker-dealers could report trading.

The service -- which effectively dusts off a so-called trade-reporting facility, or TRF, that has been mostly dormant for a year -- is backed by units of Goldman, Barclays PLC (BARC.L), UBS AG (UBSN.VX), Knight Capital (NITE.O), and by Getco, the big high-frequency market-maker.

All U.S. off-exchange trading is now printed on Nasdaq OMX&&9;s (NDAQ.O) TRF, which accounts for some 35 percent of overall volume. NYSE&&9;s rival TRF would standardize volume reporting, print it daily on its website -- and represents a way for the exchange to facilitate any new SEC rules.

Schumer said dark pools should face more robust start-up regulations, and should share the costs of providing market-wide surveillance -- an argument long held by NYSE Euronext CEO Duncan Niederauer, who was also on the call.

Schumer did not identify which body should act as monitor.

U.S. market surveillance is now shared by in-house teams at the trading venues, as well as the Financial Industry Regulatory Authority (FINRA). The SEC is the umbrella regulator and police for stock and options markets.

(Reporting by Jonathan Spicer; Editing by Gerald E. McCormick, Bernard Orr)

Schumer jumps into dark pool debate ahead of SEC meet

PARIS &S212; In a preliminary earnings report, Deutsche Bank said Wednesday that its third-quarter profit would be about &S364;1.4 billion, or $2.09 billion, beating analysts&S217; expectations.

The bank did not detail where most of its profit came from, but it said that tax exemptions and credits, partially resulting from wrapping up audits for earlier years, added about &S364;100 million to the bottom line. A full report will be issued Oct. 29.

&S220;It is expected that all business segments will report positive results,&S221; said Deutsche, the biggest German lender.

The bank&S217;s second-quarter profit of &S364;1.09 billion, which represented an increase of 68 percent from a year earlier, was tarnished by higher provisions against bad loans to corporate and retail clients. But so far, those fears have not materialized as losses.

Deutsche&S217;s Tier 1 capital ratio, a measure of the reserves a lender has to protect it from collapse, is now 11.7 percent, significantly higher than those of many of its European peers.

The preliminary report Wednesday of &S364;1.3 billion in pretax profit came as a surprise. Bloomberg News reported that analysts had estimated a pretax profit of &S364;1.19 billion for the quarter. A year ago, the bank took in just &S364;435 million in profit before taxes.

Although the bank booked a loss of &S364;4.8 billion in the fourth quarter of 2008, during the worst of the financial crisis, it managed to do without government aid even as rivals at home and abroad turned to their governments for bailouts payday loan.

&S220;They are one of the winners of the global crisis,&S221; said Christian Gattiker, research and strategy chief at Julius Baer in Zurich.

Deutsche shares slipped by &S364;1.70, or more than 3 percent, Wednesday to &S364;53.64 in morning trading in Frankfurt, but they remained up more than 90 percent for the year.

&S220;Tax issues are maybe not the best reasons for an unexpected profit,&S221; said Mr. Gattiker. But, he said, with the bank shares rising over the past couple weeks, &S220;It may be a case of &S216;Buy the rumor, sell the fact.&S217; &S221;

The bank said Tuesday that it had reached an agreement in principle with the Dutch Finance Ministry to purchase parts of ABN Amro, a troubled bank rescued by the Dutch government last year. The sale was initially announced last year, but negotiations have dragged on. The final terms of the transaction have not yet been announced, but last year, for the same assets, Deutsche said it would pay &S364;709 million.

The acquisition would strengthen Deutsche&S217;s commercial banking business and make it, by its own estimates, the fourth-largest investment bank in the Netherlands.

Deutsche Bank Seen Beating Earnings Forecast

LONDON &S212; Qatar announced Tuesday that it would sell a part of its stake in the British bank Barclays after the value of its investment almost doubled.

Qatar&S217;s sovereign wealth fund said it would sell 379 million shares in the bank, exercising warrants that it agreed to buy a year ago when the bank was suffering at the height of the financial crisis.

The fund will retain a 7 percent stake in Barclays and will remain the bank&S217;s largest shareholder.

Barclays&S217; shares rose five-fold over the last eight months after the bank avoided the government&S217;s cash injection, it acquired Lehman Brothers&S217; assets in the United States and benefited from strong earnings at its securities unit.

Qatar would make a profit of about &<63;634 million, or $1 billion, on the investment based on Monday&S217;s share price as it pays 198 pence a share to exercise the warrants.

Barclays is set to get &<63;750 million as a result of the sale to strengthen its capital base, Qatar said.

Shares in Barclays were quoted at 363 pence in early afternoon trading in London Tuesday, down 5 percent.

&S220;The decision to exercise the warrants and dispose of the resultant shares forms part of Qatar Holding&S217;s portfolio management program and does not impact on our current intention to remain a long-term strategic shareholder in Barclays,&S221; Ahmad Al-Sayed, the investment group&S217;s chief executive, said in a statement fast cash.

The sale renewed speculation among some investors that Qatar&S217;s sovereign wealth fund could be raising cash for another acquisition.

Shares of the British supermarket chain J Sainsbury jumped as much as 20 percent last Thursday because some investors expected Qatar to make a takeover bid or try to increase its current shareholding of about 15 percent.

Shares in Sainsbury, which rebuffed a takeover proposal by Qatar in 2007, rose 4 percent Tuesday in London.

The Barclays chief executive John Varley said the effect of the share sale &S220;will be further to broaden the base of our share register.&S221;

&S220;Qatar Holdings is our largest shareholder and a key partner,&S221; he said.

Qatar initially bought a 6.2 percent stake in Barclays in July last year and increased the holding to about 7 percent, excluding warrants and share options, in October because the bank needed to raise capital to avoid taking government aid.

At that time, Barclays also sold shares and warrants to Abu Dhabi&S217;s royal family and Challenger Universal, another Qatari investment vehicle.

Qatar Takes Profit on Stake in Barclays

NEW DELHI (Reuters) – Anil Kumar, charged with other executives over the biggest hedge fund insider-trading scheme, has sought leave from the board of a top Indian business school that he helped set up.

U.S. investigators have charged billionaire hedge fund founder Raj Rajaratnam, Kumar and executives from prestigious U.S. firms such as IBM (IBM.N) and the venture capital arm of Intel (INTC.O) with insider trading.

Ajit Rangnekar, dean at the Indian School of Business (ISB), told Reuters by telephone on Monday that Kumar had asked the chairman for leave of absence "until he sorts this out."

Kumar, a director at consulting firm McKinsey, is a co-founder of the ISB, whose governing board reads like a mini-Who&&9;s Who of global business, drawing on leaders from LVMH (LVMH.PA) and Dell (DELL payday loans for bad credit.O) to Citigroup (C.N) and Goldman Sachs (GS.N).

The Hyderabad-based ISB ranked 15th in the Financial Times 2009 global MBA rankings, and placed second among Asia&&9;s business schools.

Last year, Mendu Rammohan Rao, a former ISB dean, resigned from the board of Satyam Computer Services (SATY.BO) after the Indian firm&&9;s botched attempt to buy two infrastructure firms linked to its founder.

Satyam was rebranded as Mahindra-Satyam this year after it was bought by smaller rival Tech Mahindra (TEML.BO) in the wake of India&&9;s largest corporate fraud.

(Reporting by Devidutta Tripathy; Editing by Anshuman Daga & Ian Geoghegan)

Insider-trading accused seeks leave from India's ISB

NEW YORK (Reuters) – CME Group Inc (CME.O), the world&&9;s largest derivatives exchange, is in talks to take over the Chicago Board Options Exchange in a deal that would value the largest U.S. options market at up to &&6;5 billion, according to Crain&&9;s Chicago Business.

"Acting through intermediaries, officials at the exchanges have held informal discussions over the past month about a combination," but no formal bid is on the table, Crain&&9;s cited sources in a report on Sunday.

Further talks are on hold until after Wednesday, the report said outdoor fireplace plans. A deal of that size would mean a big payday for CBOE members, with each CBOE seat valued at about &&6;4 million, about 50 percent more than they fetch today, the report said.

The &&6;5 billion price tag would value CBOE at about 20 times its expected annual earnings after it converts to a shares-based private company from a member-owned exchange, the report said.

(Reporting by Franklin Paul; editing by Gunna Dickson)

CME in informal talks to take over CBOE: report

WHEN the economy appears on the verge of rebounding &<51; as it does today &<51; investors tend to gravitate toward economically sensitive stocks, which stand to benefit from improving financial conditions.

Often, this leads them to traditional growth sectors, like technology, materials and consumer discretionary stocks, which include retailers. Economically cyclical companies in areas like financial services and manufacturing may also seem appealing.

True to form, these five sectors have been among the best-performers in the Standard &&8; Poor&S217;s 500-stock index so far this year.

And, since March, each of these categories has surged more than 70 percent. That&S217;s roughly double what many of these sectors have averaged in gains in the first 12 months of new bull markets since 1949, according to S.&&8; P.

&S220;Certainly, we&S217;ve seen a tremendous run-up in the most economically sensitive stocks,&S221; said Jeffrey N. Kleintop, chief market strategist at LPL Financial in Boston.

Now, some market strategists are beginning to wonder whether these stocks have already had their day.

At the very least, prices of the most economically sensitive groups already reflect expectations of a robust recovery.

For example, the price-to-earnings ratio for the materials sector of the S.&&8; P. 500 (which includes companies like Dow Chemical and International Paper) has more than doubled over the past year, to 36 from 17, according to S.&&8; P. This figure is based on 2009 operating earnings.

But Wall Street analysts are forecasting a 99 percent rise in earnings for that category in 2010. Based on these projections, the so-called forward P/E of the materials sector is a much more palatable 18.

Analysts are similarly betting on huge earnings recoveries in 2010 for several other economically sensitive groups, like financials.

Mr. Kleintop says these earnings expectations aren&S217;t necessarily unreasonable.

&S220;But you do need to see some follow-through here,&S221; he said. &S220;You can&S217;t just see higher and higher valuations on the hope for more growth. At some point, you have to see companies, particularly in those sectors that have risen the most &<51; like consumer discretionary, technology and industrials &<51; deliver on those earnings expectations, or the market will be disappointed.&S221;

That test is beginning, with the start of the third-quarter earnings season.

Christian Anderson, an associate portfolio manager at Russell Investments in Tacoma, Wash instant payday loan., said the rally that started in early March might be entering a second phase. In the first stage, the stocks that fared best were economically cyclical shares and those that had been beaten up in the bear market.

Now, with valuations starting to come into question, investors may want to turn their attention to what Mr. Anderson calls &S220;organic growth&S221; stocks &<51; shares of companies that don&S217;t rely entirely on a robust recovery to expand their business and profits.

He said technology might be an area to consider. Many tech companies don&S217;t have any debt on their balance sheets, and tend to enjoy healthy cash flows. And unlike, say, retailing, this sector doesn&S217;t require a quick consumer recovery, he said.

What&S217;s more, technology is a growth sector in which valuations still look reasonable.

JACK A. ABLIN, chief investment officer at Harris Private Bank in Chicago, says that growth stocks in general have been outperforming the rest of the market for the past couple of years.

&S220;The group is beginning to look expensive and tired,&S221; he said.

Still, tech stocks have generally not seen their valuations rise, he added. Indeed, the average P/E ratio for tech companies in the S.&&8; P. 500 is now 22.2, based on 2009 operating earnings. That&S217;s lower than it was in the second quarter this year &<51; and well below the sector&S217;s median P/E of 30.5 since 1995.

Tech is the sector most favored by investment managers now, according to a survey by Russell Investments. Health care comes in second. While health care stocks don&S217;t depend on a strong recovery, they are still traditionally considered growth investments. And they&S217;re currently cheap. The P/E for health care stocks in the S.&&8; P. 500 is 12.8 &<51; about where it was a year ago.

The consumer discretionary sector, another traditional growth area, may be worth a look, although it is dependent on a rebound not just in the economy but also in consumer spending. But earnings here have already started to improve &<51; up 64 percent this year.

As in the technology sector, valuations for these stocks have already started to fall even as stock prices have soared. So if the overall market were to plunge, these stocks&S217; more modest prices might cushion their fall.

Fundamentally: The Proof Will Be in the Profits