NEW YORK (Reuters) – Stock index futures indicated a flat to higher open on Monday, with investors wary of taking risky bets into year-end.

Retail stocks could see support after U.S. retailers posted a better performance during the 2009 holiday shopping season, with sales up 3.6 percent, as tracked by MasterCard Advisors unit SpendingPulse.

Airline stocks may be in the spotlight as the United States tightened airline security amid growing questions about how a Nigerian man with alleged ties to militants smuggled explosives aboard a transatlantic flight and attempted to blow up the plane.

With the S&P 500 nearly 25 percent higher for the year, investors are keen to hold on to profits. U.S. stocks rallied in a shortened preholiday session Thursday, closing at 2009 highs. Markets were closed Friday for the Christmas holiday, and Monday&&9;s volume will likely be light as many traders take off the week between Christmas and New Year&&9;s.

S&P 500 futures rose 0.8 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 default payday loan. Dow Jones industrial average futures added 4 points, and the Nasdaq 100 futures gained 4.25 points.

Kraft Foods Inc (KFT.N) will be in focus as Italian chocolate major Ferrero is still examining its options on a possible bid for Britain&&9;s Cadbury PLC (CBRY.L). The UK confectioner has rejected a &&6;16.2 billion offer from Kraft. U.S.-based Hershey Co (HSY.N) and the family-owned Ferrero have said they were contemplating bids.

European stocks rose for a fifth straight session on Monday, adding to gains before the Christmas break, as an overnight rally in Asian shares boosted sentiment, but volumes were thin with London markets closed.

Oil hit a four-week high above &&6;78 a barrel as colder weather across the U.S. and fresh signs of an economic recovery helped boost the outlook for fuel demand.

(Reporting by Leah Schnurr; editing by Jeffrey Benkoe)

Stock futures edge up as investors eye year-end

ABU DHABI (Reuters) – A South Korean consortium has won a &&6;40-billion contract to build several nuclear reactors for the United Arab Emirates, industry sources said on Sunday.

The consortium would build the first nuclear power plants in the Gulf Arab region under the deal, one of the largest energy contracts ever awarded in the Middle East and also one of the world&&9;s biggest nuclear power plant deals.

"We&&9;ve won," said one industry source. "We&&9;re not sure about the exact figure but I think it&&9;s around &&6;40 billion."

South Korean President Lee Myung-bak was expected to sign the deal with UAE President Sheikh Khalifa bin Zayed al-Nahayan later on Sunday, sources said.

The consortium includes Korea Electric Power Corp. (KEPCO) (015760.KS), Hyundai Engineering and Construction (000720.KS), Samsung C&T Corp (000830.KS) and Doosan Heavy Industries

(034020.KS).

The South Korean group beat a French consortium and another group of companies from the United States and Japan.

Nascent nuclear programs in the Middle East, including in Saudi Arabia and Egypt, have fueled concerns of a regional arms race.

But the UAE has pledged to import the fuel it needs for reactors rather than attempting to enrich uranium, the fuel for nuclear power plants one hour payday loan. Uranium further refined can be used to make nuclear bombs, and taking enrichment out of the nuclear program reduces the possibility of weapons development.

Work on the first nuclear plant in the Gulf Arab region was expected to begin in 2012.

The UAE is the world&&9;s third-largest oil exporter and is looking to nuclear power to meet rapidly rising electricity consumption. Petrodollar-fueled economic growth has left the Gulf Arab state struggling to meet domestic power demand.

Abu Dhabi is driving the UAE nuclear program. The emirate holds most of the UAE&&9;s crude reserves, and has managed to avoid the worst of the global economic slowdown as well as the debt crisis that has hit neighboring emirate Dubai.

The UAE plans to build three or four nuclear reactors in a first fleet to help meet an expected rise in power demand to 40,000 megawatts in 2020 from around 15,000 MW last year.

(Reporting by Amena Bakr, Writing by Simon Webb; Editing by Amran Abocar and Sugita Katyal)

S.Korean consortium wins UAE nuclear deal: sources

SAN FRANCISCO (MarketWatch) -- Bernard Madoff, the man behind the biggest Ponzi scheme in history, has been moved to a medical facility at the federal prison complex where he's serving a 150-year sentence.

Madoff, 71, was in a medium-security facility of the Butner Federal Correctional Complex in Butner, North Carolina. However, on Dec. 18 he was moved to Butner Federal Medical Center, part of the prison complex that houses male inmates of all security levels, Traci Billingsley, a spokeswoman at Federal Bureau of Prisons, said in an email to MarketWatch.

It's not clear why Madoff was moved infra red heaters.

"The potential reasons for an inmate's transfer are numerous and we don't release those specific reasons," Billingsley said.

Ira Sorkin, Madoff's lawyer, didn't immediately respond to phone calls and emails seeking comment on Wednesday afternoon.

Madoff pleaded guilty earlier this year to running a Ponzi scheme that left investors with tens of billions of dollars in losses. He was sentenced to 150 years in prison in June.

Madoff moved to prison medical facility

SEATTLE (AP) &<51; A federal appeals court upheld a lower court ruling on Tuesday and ordered Microsoft to stop selling its Word program in January and pay a Canadian software company $290 million for violating a patent,.

But Microsoft expects the decision to have little impact on Word or Microsoft&S217;s Office package in the United States. Microsoft said Tuesday that new versions of the product, with the computer code in question removed, will be ready for sale when the injunction begins Jan. 11.

The case started in 2007 when the software company, i4i Inc. of Toronto, sued Microsoft, saying it owned the technology behind a tool in the popular word processing program. The technology gives Word users an improved way to edit XML, or code that tells the program how to interpret and display a document&S217;s contents.

A Texas jury found that Microsoft Word willfully infringed on the patent. Microsoft appealed that decision, but the United States Court of Appeals for the Federal Circuit upheld the lower court&S217;s damage award and the injunction against future sales of infringing copies of Word guaranteed payday loans.

A founder and co-inventor of i4i, Michel Vulpe, said in a statement that the company was pleased with the decision, calling it &S220;an important step in protecting the property rights of small inventors.&S221;

Microsoft said it has been preparing for such a judgment since August. Copies of Word and Office sold before Jan. 11 are not affected by the court&S217;s decision. And Microsoft said it had &S220;put the wheels in motion to remove this little-used feature&S221; from versions of Word 2007 and Office 2007 that would be sold after that date.

The company said however, that it might appeal further, asking for either a rehearing in front of the appeals court&S217;s full panel of judges or in front of the Supreme Court.

Court Upholds Patent Ruling Against Microsoft

NEW YORK – The Nasdaq Stock Market on Monday said it will delist the stocks of three small companies: Teton Energy Corp., Altus Pharmaceuticals Inc., and UCBH Holdings Inc.

Nasdaq will file the necessary paperwork with the Securities and Exchange Commission to complete the delistings, which will become effective 10 days later. In all three cases, however, the stocks have already stopped trading on the Nasdaq.

Trading in Teton Energy, a Denver-based oil and gas exploration and production company, was suspended on Nov. 18.

The same day, trading was suspended for UCBH. The company's main subsidiary, United Commercial Bank, based in San Francisco, was closed by California regulators on Nov saving account payday loan. 6 and placed under receivership of the Federal Deposit Insurance Corporation. The deposits were assumed by East West Bank of Pasadena, Calif.

The stock of Altus Pharmaceuticals was suspended on Nov. 23. Altus is a Cambridge Mass.-based biotechnology company founded in 1993. The company is developing treatments for patients with chronic gastrointestinal and metabolic diseases.

Nasdaq to remove 3 companies from exchange

NEW YORK (Reuters) – Morgan Stanley (MS.N) said on Sunday it hired former Merrill Lynch President and Chief Operating Officer Gregory Fleming to run its investment management group.

Fleming -- one of the architects of Merrill Lynch & Co Inc&&9;s sale to Bank of America Corp (BAC.N) -- will be president of Morgan Stanley Investment Management, which includes the firm&&9;s merchant banking business. He will also be responsible for Morgan Stanley&&9;s global research and will report to incoming Chief Executive James Gorman, the firm said.

Fleming left Bank of America after the deal closed in January and has been working as a senior research scholar at Yale University. He has been portrayed as a key proponent of the sale of Merrill Lynch at the height of last year&&9;s financial crisis despite initial reluctance from then-Merrill CEO John Thain.

In Andrew Ross Sorkin&&9;s book on the financial crisis, "Too Big to Fail," Fleming was also credited with getting Bank of America to agree to pay Merrill bankers 2008 bonuses up to the same level as in 2007. He also got the bank to agree to an airtight "material adverse change" agreement, meaning that even if Merrill&&9;s businesses continued to deteriorate Bank of America couldn&&9;t easily back out of the deal low fee payday loans.

Both elements of the deal proved to be very controversial as public outrage was sparked by news about the bonuses and as figures in subsequent months showed that Merrill&&9;s businesses were in worse shape than had been publicly acknowledged and Bank of America CEO Kenneth Lewis threatened to back out of the deal.

Fleming joined Merrill Lynch in 1992 and from 2003 to 2007 co-headed Merrill Lynch&&9;s markets and banking group. Fleming, a noted rainmaker who focused on financial companies, oversaw Merrill&&9;s investment banking.

He will be joining Morgan Stanley in February. Fleming&&9;s hiring follows a shuffle of executives announced earlier this week when Gorman pegged Morgan Stanley&&9;s chief financial officer and head of investment banking to run its crucial institutional securities unit.

(Reporting by Michael Erman, additional reporting by Martin Howell, editing by Martin Golan)

Morgan Stanley hires ex-Merrill COO Fleming

BARCELONA/SAN FRANCISCO (Reuters) – Chip stocks fell on Thursday after Bank of America Merrill Lynch downgraded the sector on a possible inventory correction, although two of Europe&&9;s top chipmakers were upbeat about recovery prospects.

BofA Merrill Lynch lowered its 2010 growth forecast for the global semiconductor industry and downgraded 10 chipmakers, including Intel Corp (INTC.O), turning more cautious on the group on expectations of a modest overshoot in global supply chain inventories.

"While we believe the correction will likely prove short and shallow, we think any hint of a correction in the supply chain could punish (semiconductor) stocks," BofA Merrill wrote in a note to clients.

The downgrade came two weeks after Morgan Stanley analyst Mark Lipacis noted that the good news for many semiconductor stocks had already been "baked in" and PC component suppliers would have a difficult time beating expectations.

Auriga analyst Daniel Berenbaum said notions of a strong rebound for the industry next year may not be realistic.

"Things wound up better this year than some of our worst fears, but I think demand has been pulled forward," he said. "I&&9;m concerned that everybody expects a corporate PC refresh in 2010 -- maybe it&&9;ll happen, maybe it won&&9;t happen, but I do believe it&&9;s already built into stocks."

Shares of chipmakers fell across the board on Thursday. Bellwether Intel dropped 4.5 percent, smaller rival Advanced Micro Devices Inc (AMD.N) 2.7 percent and Infineon Technologies AG (IFXGn.DE) fell 7 percent. The DJ STOXX European Technology Index (.SX8P) shed 2.9 percent and the Philadelphia semiconductor index (.SOXX) fell 3.5 percent.

German chip group Infineon was bullish on its fiscal 2010 outlook, saying sales could grow by more than 10 percent if the world economy continued to grow at its present pace. But analysts weren&&9;t convinced.

Traders saw as negative remarks by Infineon Chief Executive Peter Bauer that the company would need to boost profit margins well above 10 percent as it seeks to generate sustainable earnings amid the current recovery quick cash.

"Despite Infineon beating consensus estimates, we expected better numbers for the fourth quarter, as well as a more optimistic outlook for the running quarter, following bullish statements from competitors," Sal Oppenheim analyst Juergen Wagner wrote, keeping a "reduce" rating on the stock.

Dutch chip equipment maker ASML Holding NV (ASML.AS) -- whose order book is viewed as a barometer for major chipmakers such as Intel or Taiwan Semiconductor Manufacturing Co Ltd (2330.TW) -- also said that it still expects order intake in October-December to be at least on the same level as in the previous quarter.

But shares in ASML closed down 6.14 percent after BofA Merrill Lynch downgraded the stock to "neutral" from "buy."

Around the globe, chipmakers are recovering from a prolonged downturn. Samsung Electronics Co Ltd (005930.KS), the world&&9;s top maker of memory chips and LCD screens, in late October posted its best quarterly net profit and forecast a strong 2010 due to global turnaround in the sector.

Earlier this week, research firm Gartner raised its forecasts for the chip market in 2009, saying it now sees it falling 11.4 percent to &&6;226 billion, compared with a previous forecast for a 17 percent fall.

Next year Gartner sees the market growing 13 percent.

Taiwan&&9;s TSMC, the world&&9;s top contract chip maker, also posted its biggest quarterly net profit in a year last month and was bullish about future capital spending, aiming to invest &&6;2.5 billion on upgrading its technology.

(Additional reporting by Tenzin Pema, S. John Tilak in Bangalore; Nicola Leske in Barcelona and Hakan Ersen and Tyler Sitte in Frankfurt; Editing by David Cowell and Gerald E. McCormick)

Chip stocks fall on downgrade, CEOs talk recovery

WASHINGTON &<51; Flights over much of the eastern United States were delayed Thursday by a pre-dawn failure in a fairly new communications system, which led to the shutdown of a computer that accepts flight plans from the airlines and feeds them to air traffic controllers.

It was the fourth major systemwide disruption attributed to the communications system, which the Federal Aviation Administration began putting into service earlier in this decade as a way to cut costs and assure reliability.

But when it failed, at about 5 a.m. Eastern time on Thursday, the airlines had to send flight plans by fax, and the controllers typed them into their computers, sort of a hunt-and-peck exercise that was so cumbersome that many planes were delayed more than an hour. But there was no risk to planes in flight, according to the F.A.A.

By mid-morning the system was working again, but the backlog caused widespread airport delays.

The crucial computer that was knocked out, the National Airspace Data Interchange Network, situated in Atlanta and with a backup in Salt Lake City, had also failed in August 2008, with a similar result, but for a different reason.

Flight plans typically consist of hundreds of alpha-numeric characters giving the flight number, type of equipment, takeoff location and various intermediate points, with altitudes. When the first failure happened at about 5 a.m. &<51; a router, according to the F.A.A. &<51; it knocked out not only the computer that handles flight plans, but one that sorts through &S220;notices to airmen,&S221; or F.A.A. alerts about short-lived problems like equipment failures or runway closings, and delivers them to pilots.

By early afternoon, the F.A.A.&S217;s online status board was showing the problem limited to the Northeast. The computer that handles the flight plans was repaired by around 9 a low interest payday loans.m., but by then a huge backlog developed.

&S220;It may take many hours for the system to catch up,&S221; the National Air Traffic Controllers Association said in a statement, adding, &S220;Airport efficiency is being cut by at least half in places like New York - J.F.K.&S221;

Airlines reported problems in other areas as well. Around the country, planeloads of passengers heard pilots blame the air traffic system as they sat on the tarmac.

AirTran Airways, based in Orlando, Fla., quickly announced that passengers with tickets for Thursday could rebook without charge, as is commonly done in storms.

The aviation agency&S217;s data processing system has a variety of problems. While it was hailed as a marvel when it was introduced decades ago, much of it is written in obsolete computer language and the agency has been slow to provide updates. And with a requirement for up-to-the-minute, round-the-clock performance, parts of the system have crashed while technicians tried to install upgrades, like uninterruptible power supplies, or software fixes.

Each failure causes frustration. At LaGuardia Airport in New York on Thursday morning, Gilbert Valdez, a teacher a the University of Tricosi in Chicago, who flies in four or five times a year, showed up early for his 2 p.m. flight home because he had heard about the disruption.

&S220;It&S217;s kind of nerve wracking because I don&S217;t want to be stranded at LaGuardia,&S221; Mr. Valdez said. &S220;I just want to get home.&S221;

Micheline Maynard contributed reporting from Detroit, and Brian Knowlton from Washington.

Backlog of Flight Delays After Computer Problems

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

LONDON – European stock markets awaited direction from Wall Street on Friday despite the news that the recession in the 16-country eurozone was over.

The FTSE 100 index of leading British shares was almost unchanged, down less than a point at 5,275.92 while Germany's DAX fell 12.94 points, or 0.2 percent, to 5,651.02. The CAC-40 in France was 10.64 points, or 0.3 percent, lower at 3,797.43.

Meanwhile in the U.S., Dow futures were 14 points, or 0.1 percent, higher at 10,203 while the broader Standard & Poor's 500 futures rose 2.1 points, or 0.2 percent, at 1,089.40.

On Thursday, U.S. stocks fell by 1 percent as oil prices tumbled and the dollar continued to clamber off recent lows.

"As it stands right now, it would be of little surprise to see something of a sideways drift into the weekend break," said David Jones, chief market strategist at IG Index.

Many analysts think stocks may claw out more gains if the S&P 500 can close about the 1,100 mark. Despite several attempts this week, it has not been able to sustain a break above that level through the end of the session.

"The question investors are asking now is whether we can eventually push higher...or whether recent congestion is a sign that the rally higher is over," said Geoffrey Yu, an analyst at UBS.

Stocks have rallied strongly since March's lows with many of the world's major indexes trading at, or near, their highest levels this year as investors reined in their economic doomsday expectations to factor in a swifter than anticipated global economic rebound.

News that the 16-country eurozone emerged from recession in the third quarter did little to excite investors as the 0.4 percent quarterly rise was less than many had been anticipating, and as growth in some major economies fell short of forecasts. With a rebound in exports partially offset by weak household spending, Germany's economy grew by 0 payday loans.7 percent and France's by 0.3 percent.

Still, the third quarter rise in eurozone output was the first in six quarters and brings to an end Europe's sharpest recession since World War II. Though the eurozone's banks were not at the epicenter of the financial crisis that triggered the global economic downturn, the region suffered as demand for its high-value products fell off a cliff.

Investors also didn't get too excited by the planned merger of British Airways PLC and Spain's Iberia. Both stocks were up only around 2 percent, though they had rallied strongly in the run-up to the announcement.

Earlier, Asian markets closed mixed amid investor uncertainty about the global outlook after Wall Street's losses on Thursday.

Tokyo's Nikkei 225 fell 34.18 points, or 0.4 percent, to 9,770.31 while Seoul's Kospi was off 0.1 percent at 1,571.99. Singapore's market traded flat, while Sydney shed 0.8 percent.

Among rising markets, China's benchmark Shanghai Composite Index added 0.5 percent to 3,187.65, and Hong Kong's Hang Seng recouped its early losses to gain 0.7 percent to 22,553.63.

Oil prices continued to fall in the wake of Thursday's soft U.S. inventory data. Benchmark crude for December delivery was down 27 cents at $76.67 in electronic trading on the New York Mercantile Exchange. The contract tumbled $2.34 to settle at $76.94 on Thursday.

The euro was 0.2 percent higher at $1.4871. Despite the modest advance, the euro is still a ways down from levels earlier this week, when it nearly broke above its 15-month high of $1.5061.

The dollar was 0.6 percent down at 89.76 yen.

__

Associated Press Writers Louise Watt in London and Joe McDonald in Beijing contributed to this report.

European stocks steady ahead of Wall Street open

Finance and trade ministers meeting in Singapore for the Asia Pacific Economic Cooperation forum have agreed the global economic recovery is still fragile and more coordinated efforts are needed for sustained growth. Ministers from 21 Pacific Rim economies discussed sustaining growth and connecting the region.The economic leaders issued a statement saying although most economies are now recovering from last year's financial crisis, the recovery remains fragile and growth over the next few quarters is likely to be uneven. US Treasury Sec. Timothy Geithner (L) talks to a fellow minister at a joint APEC Finance Ministers press conference in Singapore, 12 Nov 2009The United States Treasury Secretary Timothy Geithner says while inflation is low across most major economies there are very high levels of unemployment. He says more efforts are needed to ensure an early economic recovery."Right now the challenge is growth ... let us make sure we have a business confidence restored, private investment expanding again, unemployment coming down, financial sectors definitively repaired. That is our basic challenge now," he said.Geithner says it will take some time to bring down unemployment levels, which in October reached a 26-year high in the United States.The ministers agreed on the need to find new ways for sustaining economic growth, which has largely depended on the U cash til payday loan.S. market.Geithner says the United States is seeing signs of a shift to saving more and borrowing less. He says private investment and exports are growing again."But what it means is, if the world is going to grow at the rate it can in the future, the rest of the world is going to have to shift to more domestic sources of growth, investment, and spending," he said.In the statement, APEC economies with large deficits pledged to encourage private savings, while those with large surpluses pledged to strengthen domestic growth.APEC ministers, including China, also agreed to pursue "market oriented" exchange rates. China has been accused of keeping its currency, the yuan, artificially low to boost exports. But, ministers played down currency exchange concerns.Singapore's Finance Minister Tharman Shanmugaratnam said none of the ministers called for any sudden or significant change in exchange rates, but said they should remain flexible.The finance and trade ministers were meeting before an APEC summit this weekend that is to include U.S. President Obama on his first trip to Asia as president.

APEC Ministers say Economic Recovery Fragile

NEW YORK (Reuters) – U.S. stocks added to gains in early trade on Monday, with the Nasdaq and S&P 500 rising 1 percent, after a pledge from the Group of 20 to keep economic stimulus in place bolstered risk appetite.

* Gains were broad-based, with natural resource-oriented companies and technology shares among the biggest advancers.

* The Dow Jones industrial average (.DJI) gained 80.64 points, or 0 payday loans.80 percent, to 10,104.06. The Standard & Poor&&9;s 500 Index (.SPX) rose 9.69 points, or 0.91 percent, to 1,078.99. The Nasdaq Composite Index (.IXIC) added 23.34 points, or 1.10 percent, to 2,135.78.

(Reporting by Leah Schnurr; editing by Jeffrey Benkoe)

Stocks lifted by revived risk appetite

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

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

Filed at 2:16 a.m. ET

HONG KONG (AP) -- Asian stock markets were modestly higher as investors eyed earnings from major companies for clues about the health of the global economy.

The moderate advance came after a mixed finish on Wall Street, where traders were reluctant to place major bets ahead of quarterly reports from U.S. companies.

But investors were pleased by news after the closing bell that Aluminum maker Alcoa Inc., the first of the 30 companies that make up the Dow Jones average to announce its earnings, said it was profitable again after three losing quarters.

Markets found additional girding after Australia's unemployment rate unexpectedly dropped to 5.7 percent last month, news that caused the country's currency to surge to a 14-month high and added to optimism about an economic recovery.

Still, many investors were treading cautiously as they awaited more earnings reports in the U.S. as well as the reopening of mainland China's markets Friday, which have been closed the last week for a national holiday, analysts said

''We've already had a good rebound for several days, so at this moment we're on the sidelines and looking for more news,'' said Linus Yip, a strategist at First Shanghai Securities in Hong Kong business cards.

Japan's Nikkei 225 stock average rose 19.56 points, or 0.2 percent, to 9,819.16 and Hong Kong's Hang Seng added 81.95 points, or 0.4 percent, to 21,323.54.

Elsewhere, South Korea's Kospi inched up 0.1 percent. Australia's index jumped 1.4 percent.

On Wall Street overnight, the Dow fell 5.67, or 0.1 percent, to 9,725.58.

The S&&8;P 500 index rose 2.86, or 0.3 percent, to 1,057.58, while the Nasdaq composite index rose 6.76, or 0.3 percent, to 2,110.33.

U.S. futures pointed to a higher open Thursday. Dow futures were up 74, or 0.8 percent, at 9,747.

Oil prices rose above $70 a barrel in Asia amid a weakening U.S. dollar and mixed crude inventory data. Benchmark crude for November delivery was up 68 cents at $70.25; the contract lost $1.31 overnight.

The dollar slumped further, trading at 88.18 yen from 88.60 yen. The euro gained to $1.4756 from $1.4687.

Asia Stocks Rise Modestly as Company Earnings Eyed