BRUSSELS (Reuters) &<51; European Union regulators accepted on Wednesday a pledge by the chip maker Rambus to cut royalties worldwide on computer memory chip patents for five years to settle antitrust charges and avoid a possible fine.

Under the settlement, the chipmaker will not be found liable for any wrongdoing, the European Commission said in a statement.

The commission, following complaints from Infineon Technologies of Germany and Hynix Semiconductor of South Korea, had charged the company in 2007 with abusing its dominant position by claiming unreasonable royalties.

Rambus, based in Los Altos, Calif., made its offer to settle in June and this was market-tested by the commission, the executive body of the 27-country European Union.

&S220;The commitments in their final form, as modified by Rambus, are adequate to meet the competition concerns expressed in the statement of objections,&S221; or charge sheet, the statement said.

As part of the settlement, Rambus will cap royalties at 1.5 percent for the later generations of JEDEC DRAM (dynamic random-access memory) standards for five years bad credit pay day loans.

JEDEC is a standard-setting organization for the chip-making industry. JEDEC-compliant DRAMs represent around 95 percent of the market and are used in virtually all personal computers.

&S220;An effective standard-setting process should take place in a non-discriminatory, open and transparent way to ensure competition on the merits and to allow consumers to benefit from technical development and innovation,&S221; the competition commissioner, Neelie Kroes, said. &S220;Abusive practices in standard-setting can harm innovation and lead to higher prices for companies and consumers. For its part, the commission will vigorously enforce the competition rules in this area,&S221; she added in the statement.

The commission said the five-year pledge would ensure the decision covered any claims of Rambus based on patents, and patent applications, dating back to when it was a JEDEC member.

Europe Accepts Settlement Offer From Rambus

WASHINGTON (MarketWatch) -- After several months of improvement in housing, manufacturing and sales, the U.S. economic recovery appeared to sputter in October, leading investors and analysts to re-evaluate whether their forecasts were too rosy.

The economic data to be released in the holiday-shortened week ahead could provide a few more "what-were-we-thinking?" moments. All in all, though, the data shouldn't kill hopes for modest growth while we wait for the private sector to start hiring again.

Last week, a "reality check" rippled through the markets following weak data on housing starts and industrial production, said Nigel Gault and Brian Bethune, U.S. economists for IHS Global Insight. They expect further "mixed and somewhat ambiguous" reports in the coming week, but, on whole, they say "the evidence is still positive and continues to point to a nascent recovery" that will need "strong policy support" for some time.

MarketWatch consensus See economic calendar date report forecast previous Nov. 23 Existing-home sales 5.74 million 5.57 million Nov. 24 GDP revision 2.8%  3.5% Nov. 24 Consumer confidence 45.5 47.7 Nov. 25 Jobless claims 495,000 505,000 Nov. 25 Durable goods orders 0.5% 1.4% Nov. 25 Durables ex-transportation 0.4% 1.2% Nov. 25 Personal income 0.1% 0.0% Nov. 25 Consumer spending 0.6% -0.5% Nov. 25 New home sales 390,000 402,000 Nov. 25 Consumer sentiment 67.0 66.0 Housing

Even four years after the peak, the state of the housing market remains central to the medium-term outlook.

Construction, sales and prices picked up over recent months after hitting generational lows, boosted in part by federal policies and in part by improvement in some of the fundamentals. But the weakening in the October data ahead of the anticipated expiration of the federal home-buying subsidy has put the strength of those fundamentals to the test.

The home-buyer tax credit, of course, has now been extended and even expanded. But buyers and builders didn't know that in October.

Last week, we found out that builders cut back on permits and starts on single-family homes in October, in anticipation that the tax credit would expire on Nov. 30.

This week, we'll get October data on sales of new and existing homes.

Economists surveyed by MarketWatch expect sales of existing homes to rise about 3% to a seasonally adjusted annual rate of 5.74 million. It would be the highest sales rate since June 2007. And it would reflect some sales of buyers rushing to get in ahead of the Nov. 30 deadline. Existing-home sales are recorded at closing.

By contrast, sales of new homes are recorded when the contract is signed, which is at least a month and often much more before the sale closes. To close on a sale before Nov. 30, a buyer would have had to sign contract in September or early October at the latest.

In part because the deadline would have passed for most buyers in October, sales of new homes are projected to have declined about 3% to a seasonally adjusted annual rate of 390,000, the survey says easy payday loans. Sales of new homes have underperformed compared with existing homes, probably because buyers can get a better deal on a foreclosed home or on a home owned by someone who needs to sell, fast.

Federal policies are clearly supporting the market, but there is uncertainty about how strong it would be without the support. Economists for Barclays Capital say that sales of existing homes would have risen 10% without the tax credit, instead of the 24% that has been recorded with it.

Although home prices have fallen and mortgage rates are very low, the housing market faces considerable problems. Foreclosures continue to rise and vacancy rates are at record levels, which mean prices could fall another 5% to 10% by the middle of 2010, according to Jan Hatzius, chief economist for Goldman Sachs.

If prices, sales and construction do sag, banks are likely keep credit extremely tight, which in turn could weigh on the pace of recovery, Hatzius said.

GDP revisions

The other big story for the week could be the revision to third-quarter growth figures. Last month, the Commerce Department said real gross domestic product grew at a 3.5% annualized rate, the first gain in a year. On Tuesday, that figure is likely to be revised to about 2.8%.

The revision comes from more complete data. In the first go-around, the government statisticians must estimate many of the key inputs for September, including foreign trade, inventories and construction spending. Now that those data have been released, it's clear the first estimates were too big.

The largest source of revisions will come from nonresidential construction spending and net exports. Spending on nonresidential structures was weaker than first thought, while imports were stronger than believed, suggesting that more of the gains from increased sales in the third quarter accrued to foreign producers, rather than domestic companies. Inventories will be revised lower.

"Despite the likely downward revision, we still believe that the third quarter will prove to be the first quarter of recovery and that it demonstrates a decisive turn in the economy," wrote economists for Barclays Capital.

Economists see the economy growing at a pace just above its long-term trend. They expect GDP to grow 2.5% in the fourth quarter, 3% in the first quarter of 2010 and 3.5% in the second quarter. That's a far cry from the 6% growth seen in typical V-shaped recoveries, but it's better than a poke in the eye with a sharp stick.

Of course, those are just forecasts. No one really knows for sure how the economy will do over the next 12 to 18 months.

Economic Preview: Do weaker data show recovery is stalling?

ST. LOUIS (Reuters) – A senior U.S. Federal Reserve official said on Wednesday the central bank may start tightening financial conditions by adjusting its extensive purchase programs, rather than by raising interest rates.

"The market&&9;s focus on interest rates is disappointing, given quantitative easing," Bullard said, according to excerpts of remarks prepared for delivery to a group of bankers. "Markets should be focusing on quantitative monetary policy rather than interest rate policy," he said.

"The main challenge for monetary policy going forward will be how to adjust the asset purchase program without generating inflation while interest rates are near zero," Bullard said business card.

Medium-term inflation hinges on what the Fed will do with this program, he said.

The Fed has committed to buy up to &&6;1.725 trillion in mortgage-related securities by the end of March.

Inflation is still low, but commodity prices are volatile and uncertainty over inflation is elevated compared with the fall of 2008, Bullard said.

The expansion of the Fed&&9;s balance sheet has helped restore financial health after the crisis, but it creates an inflation risk, he said.

(Reporting by Mark Felsenthal, Editing by Chizu Nomiyama)

Fed's Bullard: Shrinking reserves key to exit

SAN DIEGO (MarketWatch) -- The Federal Housing Administration is considering a variety of changes -- including requiring larger down payments for FHA-insured mortgages, demanding higher credit scores of FHA borrowers and upping FHA mortgage premiums -- to manage risk as it deals with losses in its capital reserve fund, FHA Commissioner David H. Stevens said Saturday.

"Nothing is off the table," Stevens said at the National Association of Realtors' annual conference, being held in San Diego this weekend. "I will consider everything, and I've already made several risk changes to manage the portfolio."

Yet while there is concern about the FHA's finances, its situation doesn't resemble the losses seen in the subprime mortgage market, he said.

A report released in the past week showed that the FHA has sustained significant losses from loans made before this year, as the country's foreclosure problem deepened. Its capital reserves have fallen below the threshold mandated by Congress.

By law, FHA must have two reserve accounts, Stevens explained to the Realtor audience. One is to hold funds to pay all forecasted losses, he said.

Then, "there's a secondary account, it's an excess valve that is used to pay unforecasted losses," he said. The creation of the secondary account is why FHA is "still standing while many others did not survive this tumultuous time," he said.

That secondary account is also the cause of concern.

The independent study projected that the secondary account was 0.53% of the total insurance in force this year -- below the 2% statutory threshold, according to a news release from the U.S. Department of Housing and Urban Development. That said, by combining both accounts, FHA holds $31 billion in reserves, or more than 4.5% of total insurance in force.

The study concluded that under most economic scenarios, the FHA's reserves would remain above zero. Still, some have compared FHA's troubles to those that brought down the subprime market -- a comparison Stevens says isn't fair.

Stevens said quality of FHA loans is much better than risky subprime products that became popular during the real-estate boom.

FHA-backed mortgages are for principal residences, borrowers have to fully document their income, and nearly all of them are 30-year fully amortizing fixed-rate mortgages, he said. That contrasts with poor performing subprime and Alt-a loans that required little if any income documentation and often involved low teaser rates that skyrocketed when the introductory period was over, he said payday loans with no fax.

And recently, the overall credit quality of FHA borrowers has crept up: The average borrower's FICO score today is 693, compared with 633 two years ago.

Taking action

Even though FHA is considering a variety of ways to address the reserve situation, Stevens also said it's important not to jump to conclusions and "overcorrect."

"I am modeling everything right now and looking at impacts. If you are concerned about defaults in the FHA portfolio, there are only a few primary areas that you can look at. One is the [mortgage insurance] premium, second is the qualifying guidelines -- the credit score and the down payment," he said in an interview following his speech.

"But we're doing it all with an eye on our No. 1 priority, which is to get the housing market back on track ... getting stability back in the housing system is the most important thing," he said.

Those in the real-estate industry are concerned about any action that would reduce available mortgage money. If down payment requirements for FHA rise, for example, that will take some prospective buyers out of the market and slow a recovery, said Helen Hanna Casey, president of Howard Hanna Real Estate Services, during an earlier panel on Saturday.

FHA popularity

To give an idea of FHA's recent popularity, half of the FHA's current portfolio was originated this year, Stevens said.

In the second quarter, nearly 50% of all first-time buyers in the market used a loan insured by the FHA. FHA-insured loans typically require a 3.5% down payment, which can be helpful for those buying their first home.

FHA backed about $360 billion in mortgages in 2009 and forecasts it will back $400 billion next year, Stevens said.

But FHA won't play this large of a role in the lending market forever. And it shouldn't, Stevens said.

"We are a counter-cyclical provider of capital to the housing finance system, and for it to be this large is concerning to everyone in the administration. We're filling the role and will continue to fill the role, but ultimately have to be concerned about private capital returning to the system," Stevens said.

FHA considering changes in wake of reserve losses

US President Barack Obama (C) stands with other APEC leaders for group photo following their evening dinner in Singapore, 14 Nov 2009Pacific Rim leaders have ended their annual APEC gathering with a vow to seek a sustained economic recovery and reject protectionism.The leaders of 21 Pacific Rim economies gathered around the conference table in Singapore.But the big news came outside their formal sessions - in closed door meetings and one-on-one talks.U.S. President Barack Obama focused on the sidelines, engaging in almost non-stop personal diplomacy.

Obama Discusses Climate ChangeHe began early Sunday, with an unexpected meeting on climate change called by the leaders of Mexico and Australia.Over breakfast, the prime minister of Denmark urged the group to back a different approach to save the upcoming international climate conference in Copenhagen.Severe drought is one of the expected consequence in Africa of climate changeWith negotiations on a new global climate agreement in trouble, there was consensus behind an alternative: adopt a political framework in Copenhagen and fill in the details later.

Obama Discusses Nuclear IssuesThere was also an effort to push forward talks on arms control, with President Obama and Russian President Dmitri Medvedev meeting to talk about a successor to the soon-to-expire 1991 Strategic Arms Reduction Treaty.Mr. Obama said he still believes they can get an agreement by the end of the year. The president said, "I am confident if we work hard, and with a sense of urgency about it that we should be able to get that done and I very much feel as if both sides are trying to work through some difficult technical issues but are doing so in good faith easy payday loans."

Russian President Dmitri MedvedevThey also talked about Iran's nuclear program.  President Obama urged Iran once again agree to a deal to ship its uranium out of the country for processing. "We are now running out of time with respect to that approach. And so I discussed with President Medvedev the fact that we have to continue to maintain urgency," said Mr. Obama.

President Medvedev said he still hopes to convince Iran to accept the nuclear deal. The Russian leader said, "We are prepared to work further and I hope that our joint work will yield positive results."

Obama Discusses BurmaBurma's detained opposition leader Aung San Suu Kyi (r) walks with US Assistant Secretary of State Kurt Campbell after their meeting at the Inya Lake Hotel, in Rangoon, Burma, 04 Nov 2009A short time later, Mr. Obama became the first American president to meet with all 10 members of the Association of Southeast Asia nations - including Burma.He called for political reform in Burma and the release of democracy advocate Aug San Suu Kyi, saying, "I reaffirmed the policy I put forward yesterday in Tokyo with regard to Burma."Mr. Obama's last meeting before leaving Singapore was with Indonesian President Susilo Bambang Yudhoyono. President Obama spent a good bit of his childhood in Indonesia, and has referred to himself as America's first Pacific president.In 2011, he will host the annual meeting of Pacific Rim leaders.   And the president announced in Singapore that he plans to host the gathering in his native state, Hawaii.

Obama Holds Key Talks on Sidelines of APEC

Hot News: As Consumers Trade Down, Champagne Makers Offer Discounts

NEW YORK (Reuters) – U.S. stocks gained sharply on Thursday after an expansion in business productivity and a fall in jobless claims boosted investor confidence about the economy, while Cisco led gains in tech shares.

U.S. non-farm productivity rose more than expected in the third quarter as companies squeezed more output from a smaller pool of labor, while fewer U.S. workers filed new jobless insurance claims than forecast last week -- hitting a 10-month low.

Cisco (CSCO.O) shares gained 2.2 percent to &&6;23.79 after the company reported earnings late on Wednesday. The technology bellwether reported better-than-expected quarterly revenue, and its board authorized up to &&6;10 billion in stock buybacks.

"We opened on good news from Cisco and the market just moved up higher on better news on productivity and unemployment numbers ... The next news that will move the market will be the raft of earnings after the bell today, and the unemployment numbers tomorrow," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

The Dow Jones industrial average (.DJI) gained 172.76 points, or 1.76 percent, to 9,974.90. The Standard & Poor&&9;s 500 Index (.SPX) advanced 15.95 points, or 1.52 percent, to 1,062.45. The Nasdaq Composite Index (.IXIC) rose 44.18 points, or 2.15 percent, to 2,099.70.

On Friday, the Labor Department is expected to report that fewer jobs were cut in October than in the previous month companies making payday loans. But the jobless rate is expected to rise to 9.9 percent, exceeding a 26-year high of 9.8 percent in September. Economists polled by Reuters have forecast a loss of 175,000 jobs in October, sharply below the 263,000 jobs cut in the previous month.

In Thursday&&9;s session at midday, other technology stocks also advanced. Intel Corp (INTC.O) gained 2.2 percent to &&6;19.00 and Microsoft (MSFT.O) rose 2.2 percent to &&6;28.68.

Shares of IMS Health Inc (RX.N) soared 23.5 percent to &&6;20.76 after the company agreed to be bought by TPG and CPP Investment board. The deal was valued at &&6;5.2 billion, including the assumption of debt.

But CVS Caremark Corp (CVS.N) tumbled 19.7 percent to &&6;29.04 after comments from Chief Executive Tom Ryan on weakness in the pharmacy benefit management business.

U.S. retail chains reported October sales that rebounded from the lows of a year ago, but many failed to surpass Wall Street&&9;s increased expectations as consumers spend selectively headed into the holiday season.

The S&P retail index (.RLX) rose 1.2 percent.

(Reporting by Angela Moon, Editing by Jan Paschal)

Stocks rally on data; Cisco earnings lift techs

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

Filed at 12:24 a.m. ET

SHANGHAI (AP) -- Foreign direct investment in China rose by nearly a fifth in September, suggesting the country's economic recovery is attracting investment after a lull earlier in the year.

FDI was worth $7.9 billion for the month, up 19 percent from a year earlier, the Commerce Ministry said Thursday.

But actual foreign direct investment for the first nine months of the year totaled $63.8 billion, a 14 percent decline from the same period of 2008.

China is a top investment destination but double-digit growth rates plunged in late 2007 as foreign companies were hit by the global downturn and cut spending. Many are continuing to invest in China to take advantage of its stronger economic growth compared with other countries.

There was a nearly 11 percent increase in the number of newly approved foreign invested companies in September.

The September rise in foreign direct investment compared with a 7 percent year-on-year increase in August, and declines of 35.7 percent in July and 6.8 percent in June.

"The two months' rebound shows the confidence of foreign investors in the Chinese economy low cost payday loans. With the strong rebound in the domestic economy, I believe more foreign investors will participate in China's economic development," ministry spokesman Yao Jian told reporters in Beijing.

The foreign direct investment figure does not include stocks and other financial assets, which also appear to be attracting strong investment inflows: China's foreign reserves, already the world's largest, hit a record high $2.273 trillion by the end of September, the central bank reported Wednesday.

China's economic growth rose to 7.9 percent over a year earlier in the quarter ending June 30, up from 6.1 percent the previous quarter, and analysts say the recovery is gathering strength. Retail spending and industrial investment are rising.

------

On the Net:

Chinese Commerce Ministry: http://www.mofcom.gov.cn

------

Associated Press researcher Bonnie Cao contributed to this report from Beijing.

Foreign Investment in China Up 19 Pct in September

NEW YORK (Reuters) – U.S. stock index futures rose more than 1 percent on Wednesday following forecast-beating results from Intel Corp (INTC.O) and ahead of earnings from JPMorgan Chase & Co (JPM.N).

After the bell on Tuesday, Intel, the world&&9;s largest chipmaker, posted a quarterly outlook and results that were better than expected, boosting optimism over a technology sector recovery. Its shares were almost 5 percent higher in premarket trade.

JPMorgan shares climbed 1.8 percent before the bell shortly before it was due to report results. Later this week, other major banks will also post results, including Citigroup (C.N), Bank of America (BAC.N) and Goldman Sachs (GS.N).

S&P 500 futures rose 13.70 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 98 points, and Nasdaq futures rose 21.25 points.

Oil surged for a fifth straight day on Wednesday to a 2009 high above &&6;75 a barrel, boosted by a weak dollar and surprisingly strong China trade data that underscored a recovery in the world&&9;s second-largest oil user payday loan.

The dollar tumbled to a 14-month low versus the euro and a currency basket, hurt by persistent expectations for low U.S. interest rates as well as investor appetite for commodity currencies.

Overseas, Japan&&9;s Nikkei average dipped 0.2 percent, hit by profit-taking after five days of gains and with exporters pressured by a stronger yen. European stocks (.FTEU3) rose 1.9 percent in morning trade, led by tech and commodity-related shares.

On the macroeconomic front, investors were bracing for U.S. monthly retail sales, due at 8.30 a.m. ET. Later in the session, the focus will shift to the Federal Reserve&&9;s minutes from its meeting of September 22-23, to be released at 2 p.m. ET.

U.S. stocks retreated on Tuesday after disappointing sales from Johnson & Johnson (JNJ.N) rattled investors and raised worries about the strength of company earnings, snapping the S&P 500&&9;s six-day winning streak.

(Reporting by Edward Krudy, editing by W Simon)

Stock futures sharply higher after Intel Q3; JPMorgan eyed

WASHINGTON/BERLIN (Reuters) – U.S. President Barack Obama said on Sunday he would push world leaders this week for a reshaping of the global economy in response to the deepest financial crisis in decades.

In Europe, officials kept up pressure for a deal to curb bankers&&9; pay and bonuses at a two-day summit of leaders from the Group of 20 countries which begins on Thursday.

The summit will be held in the former steelmaking center of Pittsburgh, Pennsylvania, marking the third time in less than a year that leaders of countries accounting for about 85 percent of the world economy will have met to coordinate their responses to the crisis.

Obama said the U.S. economy was recovering, even if unemployment remained high, and now was the time to rebalance the global economy after decades of U.S. over-consumption.

"We can&&9;t go back to the era where the Chinese or the Germans or other countries just are selling everything to us, we&&9;re taking out a bunch of credit card debt or home equity loans, but we&&9;re not selling anything to them," Obama said in an interview with CNN television.

For years before the financial crisis erupted in 2007, economists had warned of the dangers of imbalances in the global economy -- namely huge trade surpluses and currency reserves built up by exporters like China, and similarly big deficits in the United States and other economies.

With U.S. consumers now holding back on spending after house prices plunged and as unemployment climbs, Washington wants other countries to become engines of growth.

"That&&9;s part of what the G20 meeting in Pittsburgh is going to be about, making sure that there&&9;s a more balanced economy," Obama told CNN.

China has long been the target of calls from the West to get its massive population to spend more. It may be reluctant to offer a significant change in economic policy when Chinese President Hu Jintao meets Obama this week.

The Wall Street Journal reported that a U.S. proposal to the rest of the G20 group foresaw a new global economic framework under which the United States would save more and cut its budget deficit, China would rely less on exports and Europe would make structural changes, possibly in areas such as labor law, to make itself more attractive to investment.

China was reluctant about the plan but Washington was bringing Beijing along by supporting its call for more say for developing countries at the International Monetary Fund, the newspaper said on its website.

G20 countries have not decided how detailed to make their pledges to change their economies and there would be no specific sanctions for those falling short, the report said.

Some economists have worried that a trade dispute over new U.S. import duties on Chinese tires could make it hard for leaders to renew their pledges to avoid protectionism, let alone discuss a major rethink of the world economy.

Nonetheless, calls for a new equilibrium are growing.

"We need to have rebalancing of growth and increase in consumption in the emerging markets to have enough growth in the short term," International Monetary Fund chief Dominique Strauss-Kahn told the Financial Times Low fee payday loans.

In Pittsburgh, the first of several expected anti-G20 protest marches took place with hundreds of demonstrators demanding governments create more jobs by spending more money on public works.

"(This) is a jobless recovery and there is the prospect of a permanent high unemployment economy." said Larry Holmes, of protest organizers Bail Out the People Movement.

Bigger protests are expected on Thursday and Friday.

EUROPE PRESSES ON BONUSES

European officials renewed calls on the summit to curb bonuses paid to bankers. Massive payouts linked to risky investments are widely seen as a factor in the credit crisis.

German Finance Minister Peer Steinbrueck said he supported a Dutch proposal to limit banking executives&&9; bonuses to the level of their fixed annual salary, the kind of idea that U.S. officials, mindful of Wall Street&&9;s concerns, oppose.

German Chancellor Angela Merkel, who is seeking re-election next weekend, said on Saturday she was "thoroughly optimistic" that a deal could be done on reforming financial markets.

French President Nicolas Sarkozy has tempered his calls for bonus caps, possibly paving the way for a G20 deal tying payouts to bankers&&9; long-term performance, not quick bets.

Steinbrueck, a member of the center-left Social Democrats, said he would press G20 countries to examine the idea of a global tax on financial transactions to curb excesses.

A U.S. draft of the summit communique did not mention this plan, German magazine Der Spiegel said. But G20 sources told Reuters the idea would be discussed by leaders.

The European Union should impose limits on bankers&&9; bonuses even if the United States does not, European Commission President Jose Manuel Barroso said on Sunday.

The United States is keen to show Europe that it is taking steps to rein in excesses in financial markets.

But the pace of U.S. regulatory reform has been slow, hindered by opposition from a powerful banking lobby and the Obama administration&&9;s focus on healthcare reform.

Those delays could get longer still because the Senate&&9;s top legislator on financial regulation favors a more radical streamlining of bank supervisory agencies than the changes proposed by Obama.

The G20 leaders are due to discuss other issues in Pittsburgh, including climate change ahead of important United Nations negotiations on emissions levels in December.

The EU&&9;s Barroso will warn on Monday that the talks "are dangerously close to deadlock at the moment ... and the world cannot afford such a disastrous outcome," according to excerpts of a speech he will make in New York.

(Additional reporting by Michelle Nichols in Pittsburgh and Gregory Blachier and Anna Willard in Paris; Writing by William Schomberg in New York; Editing by Chris Wilson and Eric Walsh)

Obama wants G20 to rethink global economy

HOUSTON &<51; BP announced on Wednesday the discovery of what it characterized as a giant oil field several miles under the Gulf of Mexico, but it may take years to assess how much crude can actually be recovered.

The discovery should have no immediate effect on world oil or gasoline prices because it could take three years or more to begin extracting oil. Because the oil is so deep underwater and difficult to extract, the price of oil will need to be above $70 a barrel to make drilling profitable, energy analysts said.

Nevertheless, the discovery was another indication that the deep waters of the Gulf of Mexico are probably the most promising area in United States-controlled territory to bolster domestic oil production. The rise in gulf production in recent years, in large part because of BP&S217;s deep-water giant Thunder Horse field, has stabilized domestic production after almost two decades of yearly declines.

&S220;This is big,&S221; said Chris Ruppel, a senior energy analyst at Execution L.L.C., a London investment bank. &S220;It says we&S217;re seeing that improved technology is unlocking resources that were before either undiscovered or too costly to exploit because of economics.&S221;

The discovery, called the Tiber well, is about 250 miles southeast of Houston at a depth of more than 35,000 feet &<51; greater than the height of Mount Everest &<51; and well below the gulf floor.

It is part of a new frontier of exploration where oil companies are spending billions of dollars to find oil on the bottom of seas off the shores of Brazil and West Africa and boring through miles of rock, salt and packed sands.

The discoveries have been made possible by leaps in development of offshore drilling technology, computers and three-dimensional imaging that can pinpoint where the best reserves lie, and advanced mooring equipment to stabilize platforms in deep waters. BP officials say the oil and gas in the field is extremely hot and under intense pressure, requiring advanced well heads with thick steel and heavy insulation.

BP declined to estimate the size of the new reserve, but a company executive said that it could be bigger than the three billion barrels of oil equivalent, combining oil and gas stocks, thought to be in the recently discovered Kaskida field nearby. As the largest oil and gas producer in the gulf, BP produces 400,000 barrels a day. It has reserves of 18 billion barrels of oil equivalent in reserves globally free instant credit report.

Energy analysts say recovery rates can range widely, but that at least one billion barrels could be recoverable.

Fadel Gheit, a senior oil and gas analyst at Oppenheimer &&8; Company, said the new find means BP is &S220;gaining momentum over the rest of the guys&S221; in the gulf, and would reduce production costs in the adjacent Kaskida field since equipment could be shared in the two fields. He added, &S220;The gulf is where the action is and will remain the oil future for the United States.&S221;

BP said the well would be one of the deepest ever drilled by an oil company. The company will operate the well with a 62 percent interest. Petrobras and ConocoPhillips have also invested in the project.

&S220;The information we have gathered thus far is encouraging,&S221; a BP spokesman, Daren Beaudo, said, adding that one well has already been drilled in the area. &S220;But appraisal work will be required before we know the field&S217;s size and determine how it should be developed. It&S217;s the next wave of development of the ultra-deep-water Gulf of Mexico.&S221;

The Tiber well, along with the Kaskida discovery in 2006, &S220;support the continuing growth of our deep-water Gulf of Mexico business into the second half of the next decade,&S221; Andy Inglis, BP&S217;s chief executive for exploration and production, said in a statement.

The Gulf of Mexico accounts for about a quarter of the nation&S217;s oil production, and that percentage could rise even though many shallow-water wells are tapping out.

But the gulf is also a treacherous place to rely on oil because of hurricanes, which have been particularly fierce in recent years. Last year, the hurricanes Gustav and Ike shut down wells, damaged pipelines and forced companies to evacuate workers from production platforms for weeks, for an estimated loss of 63 million barrels of production.

Deep-water drilling in the gulf has produced some major challenges and delays. BP&S217;s Thunder Horse platform, the biggest in the gulf, which produces 300,000 barrels a day, was first drilled in 1999 but did not begin to produce for a decade because of a series of engineering problems.

BP Finds Giant Oil Field Deep in Gulf of Mexico

DETROIT &<51; James E. Press, the last holdover among top executives from Chrysler&S217;s prebankruptcy days, is expected to leave within three months, according to a person with knowledge of his plans.

Mr. Press spent 37 years rising through the ranks at Toyota to become its highest-ranking American executive before Chrysler lured him away in 2007 to help oversee marketing. He was initially one of two vice chairmen and presidents, sharing the job with Thomas W. LaSorda, who retired in the spring.

Mr. Press&S217;s departure comes as little surprise in Detroit, unlike his decision to leave Toyota, a company that has since become the world&S217;s largest automaker.

After Chrysler&S217;s bankruptcy, its new chief executive, Sergio Marchionne, who holds the same role at its Italian partner, Fiat, said he would retain Mr. Press as a special adviser to &S220;assist the new company in transition,&S221; prompting speculation that Mr. Press might retire soon.

His two-year tenure at Chrysler has been one of its toughest periods in history. Some specialists say they believe the company may still fail even after receiving billions of dollars from the federal government to avoid liquidation.

Chrysler executives declined to comment Friday on Mr. Press&S217;s future with the company.

During Chrysler&S217;s 42-day stint in bankruptcy this spring, Mr. Press, 62, oversaw the closure of 789 dealers, a quarter of its network. Rejected dealers and some lawmakers in Washington vilified Mr. Press and other Chrysler executives, but he steadfastly defended the action as necessary though painful, at one point testifying that it was &S220;the most difficult business action I have personally ever had to take.&S221; (He previously had described his resignation from Toyota as &S220;the most difficult decision I have made.&S221;)

Carl Galeana, who owns Chrysler dealerships in Florida, Michigan and South Carolina, said that while Mr. Press never lived up to the expectations that came with his celebrated arrival from Toyota, it was through no fault of his own.

&S220;He came in at a time when there wasn&S217;t a lot of upside,&S221; Mr. Galeana said. &S220;All of a sudden everything came crashing down, and from that point on it was all survival mode.&S221;

Another Top-Level Departure at Chrysler

Hot News: Off The Charts: America May Need to Find Another Financier

The Justice Department indicted a Swiss private banking executive and a Swiss lawyer on Thursday, accusing them of selling tax evasion services to wealthy clients. The move opens a new front in Washington&S217;s challenge to Switzerland&S217;s tradition of bank secrecy.

The indictment, filed in United States District Court in Fort Lauderdale, Fla., charged Hansruedi Schumacher, a director at NZB Neue Z&>52;rcher Bank of Zurich, and Matthias Rickenbach, a Swiss lawyer, with one count each of conspiring to defraud the United states.

It came a day after the giant Swiss bank UBS said that it had agreed to disclose 4,450 American client names and account details, and it indicates that the American authorities are starting to pursue smaller players that may have helped Americans hide their money.

Mr. Schumacher is a former top private banker for UBS who left around 2002 to establish and oversee NZB&S217;s private banking operations. He worked at NZB until at least last month, the charges said. Mr. Rickenbach is a partner of the Rickenbach &&8; Partner law firm, with offices in Zurich and Geneva.

A Justice Department statement said that the two men &S220;helped their clients obtain offshore credit cards and created sham loan documents.&S221; It added that they &S220;falsified bank documents to generate the appearance that assets of their U.S. clients belonged to Swiss citizens, and they falsified documents to disguise their United States clients&S217; repatriation of offshore funds as inheritances from foreign citizens.&S221;

The statement said that &S220;the defendants told their clients that their assets and identification would be safer at NZB because they had no presence in the United States&S221; and were therefore &S220;less likely to be pressured by the American authorities to disclose the identities of their United States clients.&S221;

NZB is the unnamed &S220;Swiss bank&S221; mentioned in charges filed last month against an American client of the Swiss banking giant UBS, Jeffrey Chernick, claiming tax evasion on $8 million in assets. The indictments are a sign that American authorities are widening their attack on Swiss banking secrecy. Switzerland is the world&S217;s largest repository of hidden wealth, estimated to hold nearly one-third of the $7 trillion in assets believed to be held offshore.

The indictment also charged the two men with helping a second American, John McCarthy, a UBS client, to evade taxes, in part through offshore entities in Hong Kong linked to his UBS account.

Around 2007, the complaint says, Mr. Rickenbach&S217;s father hand-carried $5,000 to New York to deliver to an unidentified client.

NZB was established in 2000 by former senior executives from Bank Julius Baer, a prominent Swiss private bank. Over 2007 and 2008, Sarasin Group, another Swiss private bank, acquired a 40 percent stake in NZB, while NZB employees own the rest.

Thursday&S217;s indictment said that Mr. Schumacher &<51; who was referred to but not identified by name in the Chernick papers &<51; was a former manager of UBS&S217;s cross-border private banking division, the unit under scrutiny for having facilitated tax evasion by Americans.

Mr. Schumacher left UBS around 2002 to join NZB and help clients of UBS and other firms to evade taxes, according to the charges against him.

The new indictment said that Mr. Schumacher and Mr. Rickenbach paid $45,000 to a &S220;high-ranking Swiss government official&S221; in 2008 to learn whether Mr. Chernick was on a list of 285 names to be disclosed to American authorities in February as part of a broad settlement with UBS. Mr. Chernick reimbursed the $45,000 fee. The payment was referred to in the Chernick filing.

Mr. Schumacher, according to the Chernick filing, told Mr. Chernick that because the smaller bank had not entered into a special program with the Internal Revenue Service, it would be subject to less scrutiny by United States tax officials than UBS.

NZB&S217;s executives include senior names in the private banking industry. Martin Eberhard, the chief executive, was previously a senior executive at Julius Baer in charge of Swiss brokerage operations; Marco Bacchetta, the head of institutional sales, was previously in charge of the brokerage team at Pictet &&8; Cie Bank in Zurich, another well-known private bank.

Frank Gut, the chief financial officer, previously oversaw the Swiss Brokerage operations at Bank Julius Baer in Zurich. NZB&S217;s Web sitedescribes the bank as &S220;a financial institution which focuses on the brokerage business with institutional investors from Switzerland and abroad, and on asset management and investment advisory services for private clients.&S221;

The Justice Department established a special prosecutors&S217; team in 2007 that is focused on Swiss banks that help American clients evade taxes, according to a person briefed on the matter. During the UBS settlement, Douglas Shulman, the commissioner of the Internal Revenue Service, disclosed that the agency was looking at the activities of other banks and intermediaries in Switzerland.

U.S. Indicts Swiss Banker and Lawyer on Tax Charges

Hot News: Wall Street up as China rebound offsets economy concerns

WASHINGTON (Reuters) – President Barack Obama is unlikely to tip his hand as soon as financial markets would like on whether he plans to name Federal Reserve Chairman Ben Bernanke to another term.

Many investors have signaled they would prefer Bernanke to get a new four-year term after his first one expires on January 31, 2010 and they would like Obama to lay to rest any uncertainty about the renomination without delay.

But the president is likely to take his time as he weighs whether Bernanke&&9;s role in the runup to the credit crisis will be a political liability going forward and if there is firm evidence the economic recovery is on track.

"If you get beyond August without an announcement, the markets will begin to get nervous," said Camden Fine, the president of the Independent Community Bankers of America.

Taking history as a guide, a public announcement could be delayed until late October. That is when former President George W. Bush announced his replacement for Alan Greenspan in 2005. Obama is considering putting his own stamp on a Fed that has seen its reputation dented in the wake of the financial meltdown of the past two years.

MARKET SUPPORT

Financial markets have given Bernanke high marks on the job and rate his chances for reappointment at about 80 percent.

Investors care about who runs the Fed because a new figure, likely a Democrat, might focus on lowering unemployment while tolerating higher-than-desirable inflation.

Such an assumption might lead markets to recalibrate their bets about longer-term securities, sending longer-term interest rates higher.

In addition, while Bernanke has mapped out his exit strategy to pull the economy back from exceptionally low interest rates and extricate the Fed from a flood of loans to financial markets without sparking unwanted inflation, other candidates might chart a different course.

For the president, however, the calculus may be complicated by the economy&&9;s slow path to recovery and a public backlash against financial bailouts for big business at a time when ordinary Americans are suffering rising joblessness and lost personal wealth.

Critics also say Bernanke was part of a Fed that failed to spot a ballooning housing bubble and stood idly by as risky lending proliferated, leading to the credit crisis.

Obama has publicly praised Bernanke&&9;s handling of the crisis, but stopped short of saying he wanted him to stay on.

The president&&9;s advisors will evaluate the merits of extending Bernanke&&9;s term in the light of their own political fortunes, which will be tested in a mid-term election in November 2010 that could be a referendum on Obama&&9;s first two years bad credit payday loans.

Many lawmakers have been scathing in their criticism of the Federal Reserve. Obama and his advisors will have to decide how much of the attacks are politically opportunistic and how much of the anger reflects broader misgivings about Bernanke and the Fed amid rising joblessness and tumbling home values.

The Senate must confirm the president&&9;s choice for Fed chairman, and while Obama&&9;s Democrats control the legislature, significant opposition to Bernanke could derail his renomination.

ECONOMY&&9;S PATH

Clear evidence the economy is on track for recovery would bolster Bernanke&&9;s candidacy and would justify Obama&&9;s own decision to fight the crisis with aggressive public spending.

"If the economy fell off the cliff, there would of course be a different view," said Eugene Ludwig, chief executive of Promontory Financial Group.

Bernanke has taken the unprecedented step of arguing his case to the broader public in prime-time television interviews and "town-hall" meetings. He has defended the Fed&&9;s bailouts of banks as a necessary evil while citing his humble upbringing as proof he is in touch with the aspirations and economic challenges of ordinary Americans.

Partisan considerations may affect how the president views Bernanke, who was Bush&&9;s choice to replace Greenspan.

Obama could be the first Democratic president to pick a new Fed chairman since Jimmy Carter tapped Paul Volcker in 1979.

With strong candidates in the wings -- White House aide and former Treasury Secretary Lawrence Summers, San Francisco Fed President Janet Yellen, and former Fed vice-chairmen Roger Ferguson and Alan Blinder -- Obama may be tempted to claim one of the most important jobs in Washington for his own party.

The president could aim to make history by naming Yellen as the first woman, or Ferguson, as the first African American, to run the central bank.

"It&&9;s also a question of who does Barack Obama want on his team," said Charles Liegeman, chief investment officer for Advisors Capital Management. "Bernanke was someone he inherited, not someone he chose."

(Reporting by Mark Felsenthal)

Obama likely in no rush to nod on Bernanke's fate

Hot News: Fannie Mae suffers massive loss, seeks more aid

United Parcel Service, the world&S217;s largest package delivery company, said on Thursday that its second-quarter earnings fell 49 percent as the recession cut business demand.

It forecast that its profit in the third quarter will be lower than analysts&S217; projections.

Second-quarter profit declined to $445 million, or 44 cents a share, compared with $873 million, or 85 cents a share, a year earlier. Sales dropped 17 percent, to $10.8 billion.

Package volume in the United States slid for a sixth consecutive quarter as the recession caused businesses to reduce orders amid the highest unemployment rate in 26 years. The company said shipments would remain &S220;significantly below&S221; those for last year. U.P.S. is considered an economic bellwether because it delivers a wide variety of items, including clothing, auto parts and financial documents.

&S220;A lot of us got excited by those initial signs of stabilization, and now we&S217;re realizing it&S217;s going to be more of a 2010 event before we see real recovery,&S221; said Nathan Brochmann, an analyst at William Blair &&8; Company in Chicago. He rates the shares market perform.

U.P.S no fax cash loans., based in Atlanta, said profit for the three months through September will be 45 to 55 cents a share, less than the 60-cent average of analysts&S217; estimates.

&S220;We are cautious, frankly,&S221; the company&S217;s chief financial officer Kurt Kuehn told analysts and investors on a conference call. &S220;We don&S217;t have any confidence that either demand or activity is going to pick up substantially&S221; in the next several months.

Domestic volume fell 4.6 percent in the second quarter, the worst results since the company&S217;s 1999 initial public offering. The measure will probably decline at a similar pace this quarter, Mr. Kuehn said. International volume tumbled 5.5 percent and will not improve this quarter, he said.

The number of hours U.P.S. airplanes were in operation declined 11 percent, saving 14 million gallons of fuel and contributing to a 54 percent drop in the company&S217;s total fuel bill to $539 million as oil prices collapsed from a year earlier.

U.P.S. Earnings Decline 49%, to $445 Million, as Downturn Saps Demand

Hot News: Asia stocks extend gains on upbeat data, earnings