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Hitachi, GE boost alliance in nuclear power business. The move comes a month after France's Areva CEPFi.PA, the world's largest maker of nuclear reactors, and Japan's Mitsubishi Heavy Industries ( 7011.T ) said they would cooperate in this sector, while Toshiba Corp. ( 6502.T ) completed a $4.2 billion deal to take control of Westinghouse, the U.S. power plant unit of British Nuclear Fuels. "We aim to grow in the global nuclear power market, such as in advanced boiling-water reactors, by generating synergies with our expertise and experience," Hitachi said in a statement. Hitachi, which estimates that 100 more nuclear power plants will be built industry-wide in the next 20 years, said the two companies would form joint ventures in Japan and the United States to construct and maintain nuclear power plants. Hitachi said it would hold a news conference at 5 p.m. (3:00 a.m. EST). The Japanese venture will be 80 percent-owned by Hitachi and 20 percent by GE, while GE will own 60 percent of the U.S. venture with Hitachi taking the rest. The two companies will discuss details of the alliance and will sign a final contract in the first half of 2007. Before the announcement, shares in Hitachi closed up 0.4 percent at 699 yen, while the benchmark Nikkei average .N225 fell 0.56 percent. GE ended trading on Friday down 0.3 percent at $35.17.

Volvo to cut 1,000 staff at Virginia plant. After years of strong demand truck makers see a sharp drop in sales in the early months of 2007 as a buying spree of older, but cheaper, trucks ahead of new tougher exhaust emission rules, taking effect at the turn of the year, comes to an end. Volvo has said that the North American heavy-duty truck market could contract by as much as 40 percent during the first half of next year. "It is completely an adjustment to the expected volume declines due to the pre-buy effect in connection to the new emission rules," Volvo spokesman Marten Wikforss told Reuters. The staff cuts at the plant, where the firm assembles trucks of the Volvo and Mack brands, will begin in January next year and be completed during the first quarter. Volvo has already said it will cut 600 jobs at its subsidiary Mack Truck's plant in Hagerstown, Maryland, during the first six months of 2007. Wikforss repeated an earlier estimate that the total costs for the firm's cut-backs in the United States will weigh on fourth-quarter earnings to the tune of 100 million Swedish crowns ($14.13 million).

European banks hiding full pension obligations. Since adopting International Financial Reporting Standards (IFRS) in 2004, many European banks have used the so-called corridor method of accounting, allowing big unrecognized actuarial losses on their pension obligations to be kept off the balance sheet. "They are hiding behind the corridor method," said the report's author Eddie Khamoo. "The real picture which has emerged is that we have a huge amount of pension deficits which ultimately will require cash funding." The report on defined-benefit pension plans of 44 West European banks said the transition to IFRS reporting resulted in about 19 billion euros (US$24.4 billion) being charged directly to banks' retained earnings. "This amount permanently escapes being reported in earnings and represented 2 percent of the banks' shareholders' equity at (the time of) transition (to IFRS reporting)," said the report. Some Swiss and German banks adopted IFRS earlier and did not have to make the charge. Khamoo said the corridor accounting method should be scrapped. "We would encourage full disclosure," he said. Banks also had to come up with a funding plan for their pension liabilities. "This is something they have to face up to. These are very large amounts and they have to fund liabilities with related assets," said Khamoo. Since the transition to IFRS, a further 4 billion euros in costs had been charged directly to shareholders' equity and "9 billion euros has not been accounted for at all by banks that adopted the corridor method at January 1, 2004." When banks transferred to IFRS in January 2004, they set their books to zero, charging past actuarial losses to their accounts. "But in less than two years they have developed 9 billion euros of further actuarial losses. That's a hug sum of money for a short period of time," said Khamoo. The report said the risk arising from defined-benefit pension obligations amounted to an additional visible risk to many financial institutions "along with the more traditional banking factors of credit and market risk." Lloyds Bank ( LLOY.L ) had the highest pension obligations as a percentage of shareholders' equity at more than 160 percent at the end of 2005. Commerzbank ( CBKG.DE ) had the lowest, at around 20 percent. The overall net deficit for the banks in the survey rose by 16.7 percent over 2005. The corridor method was adopted by 35 of the 44 European banks in the survey and the banks that did not adopt it were mostly based in Britain and Ireland. United States accounting requirements are more onerous regarding pensions liabilities. "The FASB (Financial Accounting Standards Board) came up with new standards which are effective for U.S. public companies from December 2006 and they have to record the whole funded status into the balance sheet," said Khamoo.

Hitachi, GE to form joint nuclear power ventures. The partnership would help Hitachi, Japan's biggest electronics conglomerate, turn its nuclear power business around and help it get more boiling water reactor contracts abroad, Hitachi said. Hitachi President Kazuo Furukawa told reporters the company aimed to win contracts to build at least a third of the 25 nuclear power plants the U.S. Department of Energy aims to have built by 2020. Hitachi, which had sales of 160 billion yen ($1.4 billion) from its nuclear power business in Japan last year, will transfer its 2,000-person nuclear power division to a joint venture in Japan. Hitachi will hold a 80 percent stake in the company, while GE will hold 20 percent. GE will own 60 percent of the venture in the United States, with Hitachi holding 40 percent, the two companies said. GE has roughly 1,500 employees involved in its $1 billion nuclear power business, GE said. The move comes a month after France's Areva, the world's largest maker of nuclear reactors, and Japan's Mitsubishi Heavy Industries Ltd said they would cooperate in this sector, while Japan's Toshiba Corp. completed a $4.2 billion deal to take control of Westinghouse, the U.S. power plant unit of British Nuclear Fuels. "We are not doing this in response to the competition," Rudolph Villa, president of GE's nuclear energy in Asia unit, told reporters. "This partnership is to better meet growing demand. Hitachi is very much experienced in building new plants." GE also is a partner with Hitachi rival Toshiba. GE will not create similar joint ventures with Toshiba, but Toshiba will continue to be a supplier, Villa said. Hitachi's deal with GE, to be signed by June 2007, comes as market watchers worry about Hitachi's ability to secure overseas contracts, after its faulty turbines caused nuclear power units to close down at Japanese utilities Chubu Electric Power Co. and Hokuriku Electric Power Co. in the summer. Hitachi expects a group net loss of 55 billion yen for the year to March, after factoring in an expected cost of 38 billion yen fix the turbines, plus cost overruns at its U.S. thermal power plants. Nuclear power has come back into favor on concerns about crude oil price rises among fuel-hungry countries such as the United States and China. GE and Hitachi won a $5.2 billion contract in June to build nuclear facilities starting in 2009 for U.S. power company NRG Energy Inc., in Hitachi's first major contract abroad. The two companies have been involved in the building of 63 of the 95 boiling water reactor business now in operation worldwide. Prior to the announcement, Hitachi shares closed up 0.43 percent at 699 yen, while GE ended trading on Friday down 0.3 percent at $35.17. (Additional reporting by Sachi Izumi)

Eddie Bauer agrees to be bought for $286 million. The cash deal is expected to provide Eddie Bauer, a clothing and accessories retailer, with the resources and time necessary to execute its turnaround strategy, Chief Executive Fabian Mansson said in a statement Monday. (Reporting by Anthony Kurian in Bangalore)

IBM to join Citigroup bid for Chinese bank stake. IBM Global Financing, a unit of the world's largest technology services company, will take a stake of up to 5 percent in the troubled southern Chinese lender if the Citigroup bid was successful, the sources said. Citigroup and France's Societe Generale ( SOGN.PA ) have been locked in a takeover battle for more than a year, with the sources saying both sides are bidding about $3 billion for 85 percent of GDB. China, which is set to open its banking sector fully to foreign competition under WTO obligations next month, has attracted nearly $21 billion in financial services industry investments since 2001, according to Boston Consulting Group. IBM would join a consortium that the sources said included top life insurer China Life Insurance Co. ( LFC.N ) ( 2628.HK ) "It is IBM's practice not to comment on rumors or speculation," an IBM spokesman said in an email, while officials at Citigroup and GDB declined to comment. Citigroup and its wholly-owned Associates First Capital arm would take a combined stake slightly larger than that of China Life to become GDB's largest individual shareholder, one banker involved with the bid said. If successful, Citigroup and Associates First would take a combined stake between 20 and 21 percent -- above the 20 percent limit imposed on individual foreign stakes in Chinese banks -- in an arrangement that has won Beijing's blessing, the banker said. A final agreement between the consortium members is expected to be signed this week, the banker said. Citigroup, Associates First and IBM are seeking a combined holding below the 25 percent limit on total foreign ownership in a Chinese bank. Associates First would take a stake of 1 percent or less, the source said. TOP EXECUTIVES IN TOWN Top Citigroup executives including Chief Executive Charles Prince and former U.S. Treasury Secretary Robert Rubin, now a member of Citigroup's office of the chairman, are in Hong Kong this week for meetings, the sources said. IBM Chief Executive Sam Palmisano is also scheduled to be in China this week. GDB is a top client for IBM, which supplies more than 80 percent of the bank's IT systems and devices, a technology industry source said on Monday. Citigroup last year won preliminary approval to take a stake larger than 20 percent in GDB, but that arrangement was later knocked down by regulators, re-opening the bidding with SocGen. "Everyone would have liked to go down the route Citigroup was planning if they could. Any foreign bank going into China would like to have management control," said Peter Tebbutt, a senior director in the Asia Pacific financial institutions group of Fitch Ratings. "Chinese banks generally need a lot of work in systems and commercial orientation and culture, and you need to have control to make those changes," he said. Citigroup and SocGen are attracted to GDB's more than 500 branches, rather than the lender's weak financial shape. Citigroup is also in talks to increase its stake in Shanghai Pudong Development Bank ( 600000.SS ) to 20 percent from less than 5 percent, and stakes in both banks would give the firm a footprint in two of China's richest markets. (Additional reporting by Alan Wheatley in Beijing)

Yum takes slower approach to drive-thrus in China. The fast-food company plans to open 100 KFC drive-thrus in China over the next three years, Yum China President Sam Su said, calling that plan very aggressive. The company currently has four drive-thrus in China. Su added, however, that he did not see the need for half of KFCs new outlets to have drive-thrus. McDonald's has said that at least 50 percent of its new restaurants in China would be drive-thrus as it looks to cash in on a rapid rise in car ownership in the world's most populous country. "I'm not sure I share completely that sentiment," Su said in an interview. "The car has become almost a home away from home for Americans. That's not necessarily the same in China." McDonald's is the world's largest restaurant company by sales, but has a much smaller presence in China than KFC. Yum operates more than 1,700 KFC restaurants in China and opens a new one every day on average. McDonald's has about 770 restaurants in China and plans to open about 100 a year. Car ownership is growing rapidly in China due to a booming economy that has increased consumers' ability to make big-ticket purchases. Car sales rose 27 percent in 2005 and could climb an additional 29 percent this year, according to trade magazine Automotive News. That kind of growth, along with strong performances at its existing drive-thrus, prompted McDonald's earlier this year to sign a deal with China oil giant Sinopec ( 0386.HK ) to jointly develop drive-thrus at some of the gas station operator's 30,000 locations in China. McDonald's now has six drive-thrus there. Su said KFC had made similar agreements with other retailers in China and would talk about those deals once the drive-thrus are up and running. Approaching Chinese retailers and landlords about building drive-thrus is a challenge because many are not yet familiar with the concept, he said. Nevertheless, drive-thru is one of several ways KFC is looking to expand its fast-growing business in China. Other opportunities include opening locations in airports and expanding its breakfast menu, Su said. Breakfast, he said, makes up a small portion of KFC's overall sales, but is a growing opportunity as Chinese consumers become more strapped for time. "More and more people for breakfast don't want to cook anymore and just want to grab something and go," he said. "The opportunity is very very good," he said. KFC's breakfast menu has Western-style products like a sausage-and-egg sandwich, but also has traditional Chinese items such as congee, a kind of rice porridge. KFC is also looking into adding a delivery service and expanding its business hours. McDonald's has said its growing number of 24-hour stores in China had helped boost sales in that market this year. But Su said KFC was "not jumping into 24 hours. We don't see enough evidence that there is big demand for it." Still, the more different KFC and McDonald's are, the better for both companies, Su said. McDonald's, for instance, has been aggressively marketing its primary beef menu in China, while KFC is centered around chicken.

Illumina to buy genome firm Solexa for $600 mln. The deal crystallises value in Solexa, a company which was originally founded in Britain and believes it has found a bargain-basement way to sequence whole individual genomes for a few thousand dollars. Mapping the first draft of the archetypal human genome, the "book of life" that includes all the genes in the human body, took 10 years and cost $1 billion. It was finally completed to much fanfare in 2000. Solexa's stockholders will receive shares of Illumina valued at $14 per Solexa share. Solexa shares closed at $9.70 on Friday on the Nasdaq, resulting in a 44 percent premium for the deal. In addition, Illumina has agreed to invest $50 million in Solexa in exchange for newly issued Solexa shares. Shares of Illumina fell 8.3 percent to $40.38 in morning trade on the Nasdaq, while Solexa surged 32.7 percent to $12.87. The two firms said the combined group would have a market opportunity of at least $2.25 billion and would be the only business with genome-scale technology for genotyping, gene expression and sequencing -- three key modern analytical tools. Solexa expects its first-generation instrument will enable human genome resequencing for less than $100,000 a sample, and the longer-term goal is to reduce this to a few thousand dollars, making it suitable for both basic research and clinical diagnostics. The companies said they expected the deal to close by the end of the first quarter and to add to earnings modestly in 2008 and significantly thereafter. Illumina's financial outlook for 2006 remains unchanged. San Diego-based Illumina expects to maintain Solexa's operations in California and Cambridge, England.

American Express to buy Harbor Payments. The purchase is expected to be announced as soon as this week, and completed by the end of the year. Christine Levite, a spokeswoman for American Express, declined to comment, citing a policy against commenting on rumors. A marketer at closely-held Harbor was not immediately available to comment. Atlanta-based Harbor Payments was formed in 2000 and employs about 200 people. It offers products that streamline invoices and payments between businesses. The company has an additional operation and service facility in San Antonio, Texas, and a technology center in Bangalore, India. In August 2005, Oak Investment Partners provided venture capital to Harbor Payments. (Additional reporting by Gelu Sulugiuc in Copenhagen)

GE, Hitachi form nuclear power alliance. The two companies, which already have a joint venture for nuclear fuels, have also teamed up on a bid to build a nuclear power plant that merchant power company NRG Energy Inc. ( NRG.N ) aims to build in Texas. That could be among the first new nuclear plants ordered in the United States in three decades. They said their alliance comes at a time when demand for nuclear power is ramping up in the United States, as volatile oil and natural gas prices make nuclear a more appealing power source. "To maintain the ratio of nuclear (power) generation to the total in the United States of roughly 20 percent, it's going to require roughly 20 plants to be built over the next decade or so," said John Krenicki, president and chief executive officer of GE Energy, on a conference call with reporters. The deal will create two companies, one focused on Japan and 80 percent owned by Hitachi, and another serving the rest of the world and 60 percent owned by GE. Krenicki said when the deal closes a yet-to-be determined amount in the "hundreds of millions" of dollars will be paid to GE. "Energy is a pretty important long-term story in general and this is certainly one of the trends that is going to be getting increasing attention in the next 10-15 years," said Peter Smith, equity analyst with Morningstar in Chicago, who follows GE. "This is an area that they need to be playing in to a greater extent." The partnership would help Hitachi, Japan's biggest electronics conglomerate, turn its nuclear power business around and help it get more boiling water reactor contracts abroad, Hitachi said. Hitachi President Kazuo Furukawa told reporters the company aimed to win contracts to build at least a third of the 25 nuclear power plants the U.S. Department of Energy aims to have built by 2020. Hitachi, which had sales of 160 billion yen ($1.4 billion) from its nuclear power business in Japan last year, will transfer its 2,000-person nuclear power division to a joint venture in Japan. GE has roughly 1,500 employees involved in its $1 billion nuclear power business, GE said. The move comes a month after France's Areva CEPFi.PA, the world's largest maker of nuclear reactors, and Japan's Mitsubishi Heavy Industries Ltd. ( 7011.T ) said they would cooperate in this sector, while Japan's Toshiba Corp. ( 6502.T ) completed a $4.2 billion deal to take control of Westinghouse, the U.S. power plant unit of British Nuclear Fuels. GE also is a partner with Hitachi rival Toshiba. GE will not create similar joint ventures with Toshiba, but Toshiba will continue to be a supplier, Rudolph Villa, president of GE's Asian nuclear energy Asia unit, told reporters. With U.S. utilities seeking permission to build about 18 new nuclear plants in the United States in the coming years, GE said Hitachi's recent construction experience would help. "They've been building a lot more plants than we have over the last 10 years," GE's Krenicki said. Hitachi's deal with GE, to be signed by June 2007, comes as market watchers worry about Hitachi's ability to secure overseas contracts, after its faulty turbines caused nuclear power units to close down at Japanese utilities Chubu Electric Power Co. ( 9502.T ) and Hokuriku Electric Power Co. ( 9505.T ) in the summer. Hitachi expects a group net loss of 55 billion yen for the year to March, after factoring in an expected cost of 38 billion yen fix the turbines, plus cost overruns at its U.S. thermal power plants. Prior to the announcement, Hitachi shares closed up 0.43 percent at 699 yen. On Monday, GE shares were up 30 cents to $35.47 in afternoon trading on the New York Stock Exchange. (Additional reporting by Sachi Izumi in Tokyo)

Clear Channel bids due Monday: sources. Clear Channel, which has about 1,150 stations, said last month that it was evaluating strategic alternatives for its business and had hired investment bank Goldman Sachs & Co. ( GS.N ) to advise it. Sources familiar with the situation said on Sunday that bids were due on Monday and that proposals were expected from two consortia. Providence Equity Partners, Blackstone BG.UL and KKR KKR.UL make up one consortium, while the other consists of Bain Capital, Thomas H. Lee Partners THL.UL and Texas Pacific Group TPG.UL. Details of any bids are not likely until late on Monday or early Tuesday, sources familiar with the process said. KKR, Thomas H. Lee, Texas Pacific, Bain, Clear Channel and Goldman Sachs declined comment. Blackstone and Providence were not available for comment. Clear Channel shares fell 1.2 percent to $34.55 in morning trade on the New York Stock Exchange. PRICE A number of analysts have share price targets for Clear Channel in the mid-$30s and upward. Deutsche Bank, in a recent note, said its target of $36 took into account the possibility that Clear Channel would eventually accept a bid to go private. Bank of America analysts last month raised their fair-value range on the shares to $34-$40 from $34-$38, saying there were multiple strategic options the group could pursue, including taking the entire company private and spinning off its outdoor unit. Clear Channel has a majority ownership in outdoor advertising group Clear Channel Outdoor Holdings Inc. ( CCO.N ). Other interested parties have also been named by media reports. The Wall Street Journal reported on Thursday that two groups thought to be interested -- Apollo Management and Carlyle, and Cerberus Capital and Oak Hill Partners -- had largely faded out of the picture. Clear Channel, based in San Antonio, Texas, recently forecast strong fourth-quarter radio-advertising sales. It posted a 9.5 percent drop in third-quarter profit, reflecting the spinoff of its entertainment unit. Advertising-driven radio broadcasters such as Clear Channel have been challenged to develop new formats and technology in the face of growing competition from satellite radio, the Internet, and personal digital music players. Private equity firms typically buy companies with a small portion of their own cash and borrow the rest. They usually hold a business for three to five years, restructure it, then sell it, either to a buyer or on the open market in an initial public offering. In some cases, buyout firms "flip" an investment in a year or less when they think they can make a good profit. (Additional reporting by Sue Zeidler in Los Angeles)

U.S. investor Brandes cut Volkswagen stake -paper. Quoting "well-informed sources", the Frankfurter Allgemeine Zeitung said Brandes had apparently sold a large part of its stake, adding that the U.S. investor had bought most of its shares when the stock was trading at less than 40 euros each. VW closed flat at 80 euros on Monday. The German carmaker declined to comment, and Brandes was not immediately available for comment. Volkswagen had said in October last year that Brandes held voting shares of 8.58 percent as of September 30, 2005.

Motorola wins $1.6 billion China mobile phone order. "Motorola will supply 12 million handsets in 2007 to Telling," said Yan. Motorola would supply the company with about six million cell phones this year, he said. Earlier this year, Motorola had said it expected to claim a quarter of China's handset market by the end of 2006, up from the 21 percent share it had in May. China's handset market is estimated to be growing by 25 to 30 percent a year, while Motorola aims to beat the industry's pace. Motorola competes against Nokia Oyj ( NOK1V.HE ), the world's top cellphone seller and largest mobile phone maker in China with a 28.4 percent share in April, according to industry data.

Foundation blocks Arcelor Mittal's sale of Dofasco. "We have decided not to terminate the administration of the shares of Dofasco," the foundation's chairman Allan Tuttle told Reuters in a telephone interview. Thyssenkrupp said in a statement it was not ready to concede defeat and was determined to continue its efforts to snatch the Canadian steel maker. "ThyssenKrupp will exhaust every possibility to bring about the sale of Dofasco to ThyssenKrupp, as bindingly agreed by Mittal Steel," the German company said in a statement. It added that it would build a new steel mill in the United States if the acquisition of Dofasco proved impossible. The price of the sale of Dofasco to Thyssenkrupp is C$68 per share, C$3 lower than the price paid by Arcelor to buy the Canadian group in January this year in a transaction that totaled C$5.6 billion. Arcelor acquired Dofasco prior to its struggle to fend off a hostile bid from Mittal Steel earlier this year, which ended with the friendly merger of both groups. Set up in the heat of the takeover battle, the foundation was designed to prevent Mittal Steel from selling Dofasco, which was a condition set by U.S. competition authorities to allow the merger of the two groups. "The goal of the foundation was to prevent or make the takeover of Arcelor more difficult. It is no surprise that this now causes problems," said Christopher Kummer, the Director of Manda, an Austrian mergers and acquisitions institute. U.S. regulators previously said that if the sale was blocked by the foundation, Arcelor Mittal would have to sell either its Sparrows Point plant in Maryland or its Weirton, West Virginia, plant. "Arcelor Mittal is reviewing the situation and will be in contact with the U.S. Department of Justice," Arcelor Mittal said in a statement on Monday. Sources close to Arcelor previously said the foundation was likely to refuse the sale of Dofasco on the grounds that the Canadian group holds key technology for Arcelor and that the price paid by Thyssenkrupp was insufficient. At 1338 GMT Mittal Steel shares were up 0.94 percent in Amsterdam. ThyssenKrupp shares were down 0.98 percent in Frankfurt. (Additional reporting by Christian Hetzner and Michael Shields in Frankfurt)

Starbucks sees 2,400 new stores in fiscal year '07. Colman Cuff, Starbucks' director of trading and operations, said the new stores would be spread among the United States and worldwide markets, with Asian growth driven by China. "In fiscal year 2006 we opened more stores than were forecast, and we will better that in fiscal year 2007," Cuff said at the Sintercafe coffee industry conference in Costa Rica. The 2006 fiscal year ended on October 1. Starbucks has more than 12,000 stores, including 8,800 in the United States. The company expects China, where it has more than 400 stores, to one day be its biggest market outside the United States.

Stocks rise on oil drop; election worry lingers. Analysts said there was also lingering uncertainty about the legislative agenda of the Democrats after they won control of Congress in last week's mid-term elections. Analysts fear the Democrats could pile pressure on big pharmaceuticals to cut prices and may consider curbing defense spending. Since the November 7 vote, the index of drug stocks is down 4.2 percent. "Oil is below $60 a barrel, which is positive," said Todd Leone, head of listed trading at Cowen & Co. in New York, but looking ahead, "you have a lot of economic numbers coming out this week. So people are nervous and they're not screaming to buy. You've also got the Democrats back in control of Congress." The Dow Jones industrial average .DJI was up 36.26 points, or 0.30 percent, at 12,144.69. The Standard & Poor's 500 Index .SPX was up 4.73 points, or 0.34 percent, at 1,385.63. The Nasdaq Composite Index .IXIC was up 13.26 points, or 0.55 percent, at 2,402.98. U.S. crude for December delivery extended Friday's 2.6 percent drop on expectations that mild U.S. Northeast weather would slow heating demand. It was last down 55 cents at $59.04 a barrel. GE shares jumped 0.9 percent to $35.48 on the New York Stock Exchange, benefiting also from positive broker comments. Shares of another diversified manufacturer, Honeywell International Inc. ( HON.N ), gained 1.2 percent to $43.05, also on the NYSE. Citigroup added GE to its recommended list, along with chip maker Intel Corp. ( INTC.O ). Both stocks were among the top positive influences on both the Dow and the S&P 500 Index. Intel shares rose 1.9 percent to $20.96, lending the biggest boost to the Nasdaq. On Tuesday, the Labor Department releases its October report on the Producer Price Index. That will be followed on Wednesday by the release of the minutes from the most recent meeting of the Federal Reserve's Federal Open Market Committee on October 24-25, when it held its benchmark federal funds rate steady at 5.25 percent for the third consecutive time. On Thursday, the Labor Department will release the October Consumer Price Index. Earnings results from some top retailers are expected on Tuesday, including No. 1 home improvement chain Home Depot Inc. ( HD.N ). (Additional reporting by Caroline Valetkevitch )

Eddie Bauer accepts $286 mln private equity bid. A company owned by affiliates of Sun Capital Partners Inc. and Golden Gate Capital will pay stockholders $9.25 per share, a 4.5 percent premium over Friday's closing Nasdaq price, and assume about $328 million in debt. The stock, which traded as high as $23.50 in December, was up 13 cents, or 1.5 percent, at $8.98 in afternoon trading. Eddie Bauer has struggled to revive a brand that traces its roots back to 1920. The company is best known for outdoor-inspired clothing and accessories, but has also licensed its name for products ranging from Ford Explorer trucks to baby strollers. The retailer operates some 375 stores, but analysts have long said that it had trouble setting itself apart from similar companies such as L.L. Bean and Sears Holdings Corp.'s ( SHLD.O ) Lands' End. "We believe that the transaction will provide Eddie Bauer with new resources and the time necessary to execute our turnaround strategy," Chief Executive Fabian Mansson said in a statement on Monday. Through affiliates, Sun Capital and Golden Gate own several retail and catalog brands, including department store chain Mervyn's; ShopKo Stores, which sells casual clothing, beauty items and housewares; and Marsh Supermarkets. All were previously publicly traded companies or part of larger public companies. Eddie Bauer had put itself up for sale in May, some 15 months after parent company Spiegel pulled it off the auction block for failing to get a high enough bid. The parties expect the deal to close in the first quarter, pending shareholder and regulatory approval. Eddie Bauer said its directors unanimously approved the deal and recommended that shareholders vote for it. Goldman Sachs Group Inc. ( GS.N ) was Eddie Bauer's financial adviser. (Additional reporting by Anthony Kurian in Bangalore)

DRAM demand for Q1 2007 "very strong": Samsung. Chu Woo-Sik, senior vice president of investor relations, said Samsung would sell more mobile phones in January-March than in the current quarter, and its LCD business was performing better than expected in the current quarter. The world's top memory chip maker and biggest maker of large liquid crystal displays (LCD) so far this year also said it was considering an additional eighth-generation LCD line. "Our DRAM (dynamic random access memory) orders for Q1 are very strong, considering the seasonality aspect. We have most of the orders for Q1 as PC OEMs (original equipment makers) are ordering to be Vista-ready," Chu told the Samsung Tech Forum 2006 in Singapore. Samsung, the world's third-largest handset maker after Nokia ( NOK1V.HE ) and Motorola MOT.N, sold a record 30.7 million phones in the July-September third quarter and has said it expects to beat that in the fourth quarter. For 2007, Chu said the company expected to beat global handset sales growth, which it projected at 10 percent. But he said fourth-quarter handset profit margins would fall from the third quarter due to marketing costs. Samsung's handset division had an 11 percent profit margin in the third quarter versus 9.5 percent in the second quarter. "Samsung traditionally suffers from high marketing costs in the fourth quarter as they clear out inventory. Profit margin in handsets should come in at 10 percent in the fourth quarter and 11 percent in the first (quarter of 2007)," said An Sung-ho, analyst at Hannuri Securities in Seoul. Samsung's mobile business is recovering from a difficult first half -- during which it was hurt by the runaway success of Motorola's clamshell RAZR phone -- with the success of a new series of ultra-sleek phones launched over the summer. Song Myung-sup, analyst at CJ Investment & Securities, said he expected Samsung to sell just over 31 million phones in the fourth quarter and 33 million in the first quarter of 2007. Samsung shares rose 1.6 percent on Monday in a flat market .KS11 as its comments fueled optimism on sector earnings. Chu said half the demand for Samsung's handsets would come from emerging markets next year. "We see a big surge from Eastern Europe and India," he added. NAND "NOT BAD" He said demand and prices for DRAM chips, used mostly in personal computers, were strong in the fourth quarter and saw the market for NAND flash memory chips, popular in digital cameras, stabilizing as well. "Overall demand is expected to be pretty strong for NAND flash next year," Chu said, adding that demand would be supported by new applications such as music cellphones, car navigation systems and portable media players. Chip and PC makers have been eagerly awaiting the release of Microsoft's ( MSFT.O ) Vista operating system as consumers have been delaying the purchase of new PCs for the same reason. "For a while, there were oversupply fears about DRAM for the first half of 2007, but it seems manufacturers are fairly confident demand will remain sufficient," said CJ's Song. In DRAM, Samsung competes with Germany's Qimonda QI1Ay.DE QI.N and South Korea's Hynix Semiconductor ( 000660.KS ), while in NAND, it competes with Japan's Toshiba ( 6502.T ) and Hynix. LCD SHORTAGE POSSIBLE On LCDs, Chu said the fourth quarter was shaping up to be better than anticipated, thanks to cost cuts and a recovery on the monitor display side. "In the second half of 2007, there could be a shortage of LCD panels on the TV side," as the LCD industry delays fresh investment in the wake of price falls, Chu said. Jun H. Souk, executive vice president of LCD R&D center, told reporters Samsung was mulling an additional 8G LCD line but had not decided whether it would be built with Japan's Sony ( 6758.T ). A Sony spokeswoman declined comment on the matter. The 8G line will use bigger glass panels, enabling makers to produce more LCD panels and boost efficiency. Eighth-generation mother-glass substrates yield eight 46-inch TV panels or six 52-inch panels, versus six 46-inch panels from 7th-generation glass. David Steel, vice president of marketing at Samsung's digital media division, told reporters he expected global sales for LCD TVs to rise to 66 million units in 2007 from an estimated 42 million this year, while plasma display TVs would increase to 13 million from 10 million. (Additional reporting by Marie-France Han in Seoul)

Ex-KB Home chief reaped big riches in housing boom. Few people have ridden the housing wave as successfully as former KB Home CEO Bruce Karatz and other heads of publicly traded home builders, whose business exploded from late 2003 until the end of 2005 as consumers armed with low mortgages rushed to buy homes in hot markets. Since then, however, the sizzling housing market has slowed and home-building stocks have fallen. Karatz took in nearly $45.6 million in the fiscal year ended November 30, 2005, including base pay, bonus, restricted stock and stock option grants, up about 29 percent from $35.3 million in 2004, according to data compiled by Salary.com, a compensation specialist. KB Home's stock rose 39 percent in 2005, but shares are now down by about that same percentage so far this year as the housing market has cooled. Much of Karatz's 2005 earnings came from $27.9 million in restricted stock, almost double what he got a year earlier. Karatz agreed on Sunday to repay the Los Angeles-based company, the fifth-largest U.S. home builder, about $13 million in gains he received from mispriced stock options. But the two sides still must hash out other exit terms, including what happens to his millions of dollars worth of outstanding unvested stock options and restricted stock awards. The past few years have been particularly lucrative for heads of home-building companies, with compensation packages often tied to rising profit at their businesses. In announcing Karatz's departure, KB Home noted that the company's total annual revenue had soared to more than $9.4 billion in 2005, up from $1.4 billion a decade earlier. But critics of lofty executive compensation say the big paydays for home-builder chiefs in recent years were mostly a result of economic factors such as affordable mortgages that created the sizzling housing market -- not because of who was at the helm of these companies. "The housing industry was the beneficiary of low interest rates, so they were the beneficiary of that," Arthur Kroll, chief executive of executive compensation specialist KST Consulting, said of CEOs in the home-building sector. Last year, Toll Brothers Inc. ( TOL.N ) boss Robert Toll took in $37.9 million in base pay, bonuses, stock option grants and restricted stock, according to the Salary.com data. Much of that was from his bonus, which totaled $27.3 million. Other pay awards to home-building chiefs last year included $32.8 million to Lennar Corp. ( LEN.N ) chief Stuart Miller and $32.4 million to Ara Hovnanian of Hovnanian Enterprise Inc. ( HOV.N ), according to Salary.com.

Holiday sales seen modestly higher: survey. The first in a series of holiday shopping polls by America's Research Group found that a surprisingly large 89 percent of respondents planned to shop at Wal-Mart this year, suggesting that the retailer's aggressive price cuts will succeed in luring more customers. Based on a random survey of 1,000 adults, conducted Wednesday through Friday, America's Research Group projected that holiday sales at stores open at least a year -- a key retail measure known as same-store sales -- would be up about 3.1 percent, roughly the same as last year. Reuters journalists will be tracking the survey responses throughout the holiday shopping season, which typically generates about one-fourth of retailers' annual sales. The next survey will examine shopping patterns on the Friday after Thanksgiving, also known as "Black Friday," the traditional start to the holiday shopping season. Wal-Mart, the world's biggest retailer, has announced markdowns on key toys, electronics and small appliances in recent weeks as it tries to reinvigorate sales growth following back-to-back months of disappointing results. Britt Beemer, head of America's Research Group, said he was "a little flabbergasted" by the high number of people who said they planned to shop at Wal-Mart. He had expected a figure closer to 70 percent, which is about how many have said they shopped Wal-Mart for holiday gifts in prior years' surveys. Of those who planned to avoid Wal-Mart this year, most said it was because they disliked the crowds. Less than 1 percent cited Wal-Mart's reputation, which has been hurt by increasingly vocal critics of its pay and benefits. The survey also found that some 72 percent planned to shop for electronics at Wal-Mart now that the retailer is carrying more recognized brands such as Panasonic televisions. "As they've added more name brands, it gives them more credibility for electronics," Beemer said. GETTING THE MESSAGE Shoppers are paying especially close attention to advertising this year, and nearly 95 percent said they would buy a big-ticket item on the day after Thanksgiving if it were advertised as part of "early bird" specials, when stores give bigger discounts to shoppers who arrive early. That was twice as many as in last year's survey. With customers listening more closely to advertising, retailers need to watch what they say. Some 53 percent of those polled said they were bothered by stores shunning "Merry Christmas" for the more generic "Happy Holidays." Wal-Mart, which faced sharp criticism in recent years for switching to "Happy Holidays," announced last week that it would bring Christmas signs back to its stores, and encourage greeters to say "Merry Christmas." Retailers also need to be sure that they have the staff to handle the crowds. The survey found that 64 percent of shoppers will avoid stores that are short-handed, up from 51 percent in last year's poll. Some 28.1 percent of consumers planned to entertain more at home this year, and spending on Christmas decorations was expected to rise, according to the survey, which has a margin of error of plus or minus 3.8 percent.

Berkshire cuts Ameriprise stake to 6 percent. Berkshire and its subsidiaries owned 14.72 million shares of Minneapolis-based Ameriprise as of October 31, down from 23.92 million shares as of March 29, according to the filing. Ameriprise spokesman Paul Johnson declined to comment. American Express Co. ( AXP.N ), the credit card and travel services company, spun off Ameriprise in September 2005 in the form of a tax-free dividend to shareholders. Omaha, Nebraska-based Berkshire had a 12.2 percent Ameriprise stake following the spinoff. After it sold one-fifth of this investment, it said it expected to retain the remaining 9.8 percent stake "for the foreseeable future."

Russia rejects expansion of Chevron oil link: paper. The paper said shareholders in the Caspian Pipeline Consortium (CPC) had proposed adding $2.5 to the current pipeline transit fee of $27.38 per tonne of oil to get Russia's agreement on a long-awaited expansion of the link. The consortium wants to almost double capacity from 700,000 barrels per day (bpd) to 1.3 million bpd, but has faced opposition from Russia, which fears the pipeline -- the only private crude oil link on its territory -- could increase tanker traffic at the already congested Bosphorus straits in Turkey. Russia complains that low transit fees are delaying repayment of $5.3 billion in loans which CPC raised from its private shareholders. That in turn delays the moment when Russia starts receiving its profits as a shareholder. But raising transit fees could also make the pipeline a less attractive option for oil exporters, which would give Russian pipeline monopoly Transneft a greater say in the growing Caspian export market. The paper quoted sources close to Russia's state property agency as saying the Energy Ministry wanted the fee to be raised by nearly 40 percent. It quoted a letter from Energy Minister Viktor Khristenko to Chevron as saying that Russia was going to stick to its tough position toward the Caspian Pipeline Consortium (CPC). An Energy Ministry spokesman could not confirm the information. Chevron's Moscow office said the company had not received the letter officially, although it was aware that it was being prepared. "Chevron is currently working very actively with all CPC shareholders on agreeing the basis for CPC expansion," a spokeswoman said. "The work is going well and we expect it to conclude in the near future," she added. Analysts say Russia's tough line on CPC -- the venture has also received back-tax claims -- is part of a broader Kremlin strategy to limit foreign involvement in the strategic energy sector. Russia has slapped the group with a 4.7 billion rouble ($176.6 million) back-tax claim for 2002-2003 and is currently checking its accounts for 2004-2005. CPC handles most of the oil exports from Kazakh oil fields to Novorossiisk, Russia's largest Black Sea port, for re-export to world markets. Chevron is a 15 percent shareholder in CPC while Russia is a 24 percent shareholder in the consortium. Shareholders also include Kazakhstan and Oman as state shareholders as well as oil companies BP Plc, Royal Dutch Shell, LUKOIL and Rosneft.

Freescale shareholders approve sale of company. Shareholders will be entitled to receive $40 per share upon closing of the deal, which could be the biggest-ever leveraged buyout of a technology company. The number of shares voted in favor of the sale represent about 73 percent of the company's voting shares. Freescale said it expects the deal to close in the fourth quarter of this year, pending customary closing conditions. Other firms in the consortium buying Freescale include the Carlyle Group, Permira Funds and Texas Pacific Group.

Bank of America speeds up free online trading. The program lets investors make up to 30 free online equity trades per month through Banc of America Investment Services Inc. if they deposit at least $25,000 in Bank of America accounts. It is intended to encourage people to do more business at the No. 2 U.S. bank, which operates more than 5,700 branches. Bank of America introduced the program in the U.S. Northeast last month. Monday's expansion extends the program to Alabama, the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina and Virginia. "The process is moving quicker than we originally planned, largely because of the strong market demand we've seen," spokesman Jon Goldstein said. He declined to say how much business the bank is attracting with the offer. The Charlotte, North Carolina-based bank now expects to complete the nationwide roll-out in early 2007. It previously expected to complete the roll-out next spring. The bank has about 1.6 million brokerage customers. Rivals have not raced to match Bank of America's lowered fees. The surprise October 11 launch of the program sent shares of rivals such as Charles Schwab Corp. SCHW.O, E*Trade Financial Corp. ET.N and TD Ameritrade Holding Corp. ( AMTD.O ) down several percent that day. Bank of America shares fell 4 cents to $54.73 in afternoon trading on the New York Stock Exchange.

Oil falls $1 on U.S. warmth, OPEC cut doubts. "There are growing concerns about the lack of OPEC compliance," said Bill O'Grady, analyst at A.G. Edwards. "If OPEC isn't cutting back as much as it says it is, it will be hard for prices to stay afloat." U.S. crude CLc1 settled down $1.01 to $58.58 after falling as low as $58.25, while London Brent crude LCOc1 fell 66 cents to $59.05. Top world exporter Saudi Arabia is planning to enforce its OPEC oil cut in full until the end of the year, sources said Monday, but analysts expected that some other OPEC members would not adhere to their output limits. The Organization of Petroleum Exporting Countries agreed last month to cut production by 1.2 million barrels per day from November 1. But the U.S. government said last week it was expecting OPEC to fall well short of that cut, reducing output by only 745,000 bpd this month as Iran and Venezuela keep their production steady. Adding to pressure, U.S. heating demand was expected to be about 16 percent below normal this week, the second straight week of below normal weather-related energy demand, according to the National Weather Service. "We're treading water ahead of the winter," said Jason Schenker, an economist at Wachovia Bank. "Inventories look good, and it is pretty warm." Oil prices are 25 percent below their peak hit in July. Oil markets took a hit late last week after the International Energy Agency reported a large increase in inventories in the biggest consuming nations, and forecast reduced demand for OPEC oil. The IEA, which represents the interests of consumer countries, said stockpiles in leading industrialized nations filled at a rate of 1.15 million bpd, the biggest third-quarter rise since 1991, due to a slowdown in demand growth. But it also said markets would tighten more than expected in the fourth quarter as winter demand rebounds. Data from the U.S. Energy Information Administration on Wednesday will provide the next indication of the health of U.S. stockpiles.

Sony's PS3 has problems running PS, PS2 games. The PS3 should be able to load and run games designed for earlier PlayStation models, but the paper said some sound and screen problems have been reported when these games were played on the new console. Officials at Sony's game division were not immediately available for comment. Sony is going up against Microsoft Corp.'s ( MSFT.O ) Xbox 360, on sale for the past year, and Nintendo Co.'s 7974.OS Wii, which will hit U.S. stores next week. Sony was able to ship only 100,000 units for the launch after a glitch in blue laser diode production disrupted its output plans. It plans to have the PS3 on shelves in North America on November 17, followed by a European launch in March.

Illumina to buy Solexa for $600 million in stock. Solexa's stockholders will receive shares of Illumina valued at $14 per Solexa share. Solexa shares closed at $9.70 on Friday on the Nasdaq, resulting in a 44 percent premium for the deal. In addition, Illumina has agreed to invest $50 million in Solexa in exchange for newly issued Solexa shares. Shares of Illumina were at $40.88 in early electronic trading, down 7 percent from a Friday close of $44.05 on the Nasdaq. Solexa shares jumped to $13.30 in early electronic trade. The combined company will have a market opportunity of at least $2.25 billion, they said. The companies said they expect the deal to close by the end of the first quarter and to add to earnings modestly in 2008 and significantly thereafter. Illumina's financial outlook for 2006 remains unchanged. San Diego-based Illumina expects to maintain Solexa's operations in California and Cambridge, England.

EU to start MasterCard closed hearing on Tuesday. The European Commission alleges the company restricted competition by setting minimum prices retailers must pay, and will open two days of closed hearings starting on Tuesday. The Commission is considering abolishing controversial and complex interbank fees charged by MasterCard, which can differ card by card. The probe is part of a larger look at the payment industry by the European Union's executive body and comes as EU Internal Market Commissioner Charlie McCreevy said he and his competition counterpart might team up to take tough, sector-wide action. McCreevy said he would not hesitate to get involved if he found evidence of abuse. (for story, click on nL13885456) Competition Commissioner Neelie Kroes said this year the area needed review because practices in the credit card industry pushed up payment card costs for consumers and businesses. MasterCard associate general counsel Carl Munson, in Brussels for the hearings, declined to discuss the case directly because of restrictions he said were imposed by the Commission. But he said the company's business practices were helpful to everyone involved. "We would argue that in the long run this is a benefit not just to cardholders but to merchants," he said. But Cecile Gregoire, an economist for EuroCommerce, a trade group of merchants, wholesalers and traders, argued that MasterCard used its power to charge high rates. And she said because most merchants did not impose surcharges for using credit cards, customers who paid cash subsidized the fees that merchants must pay banks. "The (fees) act like a tax on transactions, increasing the prices of all goods, even for consumers who do not pay with credit cards," she said. "Why should the merchant pay for this service?" she asked. Munson argued that merchants had a choice. "Cash is an alternative. Cheques are an alternative. The truth of the matter is that there are an awful lot of merchants that don't take debit cards," he said in a telephone interview. Replied Gregoire: "Commercially, most retailers cannot afford not to accept cards." In a public statement, the Commission said 85 percent of all merchants in the 28-country European Economic Area accepted the cards. MasterCard had 45 percent of the cards, sharing the market with Visa. A second issue is the requirement that all cards be honored. Gregoire said merchants could not tell the costs of each card, with some cards costing more than others. Nothing pops up to warn a merchant of higher fees on some cards than others, she said. Munson said merchants could telephone to find the costs of particular cards, but acknowledged there was no monthly accounting of the cost of each transaction each month. Gregoire also said MasterCard had hiked the costs of debit cards when it took over such an operation in Britain. She said that when MasterCard's Maestro took over the Switch system there, "there was a 60 percent increase in cost overnight". Munson said he lacked specific knowledge of those costs, but that the costs per transaction were usually only pennies. The overall 23 billion card payments made in the EU in 2004 added up to 1.35 trillion euros, the Commission said. ($1=.7775 euro)

Tyson Foods posts another loss, but sees 07 profits. "The best thing I can say about fiscal 2006 is, it's over," Chief Executive Richard Bond said in a statement. Tyson is the nation's No. 1 producer of beef and chicken and No. 2 producer of pork. An excess of meat and higher prices for feed and fuel have hurt Tyson and other producers. To restore profits, Tyson this year initiated a $200 million cost-cutting plan, closed meat plants, and cut chicken production. "We think the worst is behind the industry. Given that we believe the time to buy commodity stocks is when earnings have troughed and have begun to improve, we think now is the time to buy Tyson," Diane Geissler, Merrill Lynch food analyst, said in a research report. Tyson reported a loss of $56 million, or 17 cents a share, for the fiscal fourth quarter, compared with a year-earlier profit of $117 million, or 33 cents per share. It took charges totaling $43 million, or 10 cents per share, relating to cost cutting, plant closings, and to tax and accounting issues. Excluding charges, the loss would have been 7 cents per share. On that basis, analysts' average forecast was for a loss of 4 cents per share, according to Reuters Estimates. Tyson itself had predicted it would break even or post a loss up to 10 cents per share. Revenue for the fourth quarter was $6.471 billion, in line with Wall Street estimates but down from $6.495 billion a year earlier. The company posted a loss of $196 million, or 58 cents per share, for the year ended September 30. In the last three quarters it has posted losses of $235 million. But Tyson forecast a profit of 50 to 80 cents per share for the current year due in part to cost-saving measures. "We set a short-term goal to return to profitability, and based on our business performance to date, I am very confident we will achieve it in the first fiscal quarter of 2007," said Bond. Tyson shares were up 60 cents or 4.2 percent at $14.95 in afternoon trade on the New York Stock Exchange. Not all analysts were positive. Pablo Zuanic at J.P. Morgan said improvement in the beef and chicken segments may be slower than Tyson expects. "We rate Tyson neutral and do not agree with the almost substantial jump in the share price today. We believe fiscal year 2007 guidance assumes meaningful year over year improvements in chicken and beef economics, which we do not share," Zuanic said in a research report. The company does not provide quarterly forecasts but in a conference call with Wall Street analysts predicted a "very strong" second half of the year. The excess of chicken forced U.S. producers to cut production, and Tyson said it had cut output about 5 percent and that would not be added back in 2007. Tyson raises its own chickens for its poultry plants but buys cattle and hogs for its beef and pork operations, and higher corn prices have affected results. Corn prices reached a 10-year high at the Chicago Board of Trade in early November, largely due to increased demand from the growing ethanol industry, and that has increased meat production costs. "Higher grain costs are going to raise the cost of protein for the consumer -- this will also be true for beef and pork as well," said Bond. Meat analysts have said the latest oversupply of meat has been due to greater production. The U.S. Agriculture Department projects U.S. beef production in 2006 to rise 5.2 percent, pork to rise 2 percent and chicken to rise 1.4 percent.

Hess, BHP Billiton, Repsol to buy Anadarko site. Hess said the companies will buy the Genghis Khan development, located in Green Canyon blocks 652 and 608 in the Gulf of Mexico. The development has estimated gross hydrocarbon reserves of 65 million to 170 million barrels of oil equivalent, it said. BHP Billiton will own a 44 percent stake and operate the site, while Hess and Repsol will each own 28 percent. Hess said it will pay $378 million for its interest.

Gannett, Greenberg pursuing Tribune: reports. After putting in a bid for the whole company, Gannett executives visited Tribune's Chicago headquarters to hear management's presentations, the Chicago Tribune and Los Angeles Times -- both Tribune papers -- reported over the weekend. The Wall Street Journal also reported the meeting in its online edition on Sunday. The New York Times reported on Monday that Greenberg too is considering a bid for Tribune and has been reaching out to investment bankers and lawyers about pursuing an offer. Greenberg has also expressed interest in pursuing The Boston Globe, owned by the New York Times, and Dow Jones, publisher of the Wall Street Journal. Gannett's pursuit of Tribune, publisher of USA Today, forms part of an already crowded field of suitors, which includes several groups of private equity firms. Tribune, with a market value of about $8 billion, is trying to sell itself against the background of weak financial results, an uncertain future and pressure from the Chandler family, a major shareholder. Tribune assets also include New York's Newsday and the Chicago Cubs baseball team. Since opening the bidding process, Tribune has reached out to several media groups, including Gannett, Hearst Corp. and Dean Singleton's MediaNews Group Inc., the Wall Street Journal reported on Sunday, citing people familiar with the matter. The company also has been in contact with News Corp., which is interested in Newsday in New York, the Journal said. MediaNews has had informal discussions with Tribune about some of its assets, such as the Hartford Courant and the Stamford Advocate in Connecticut, but hasn't had any meetings with the company, the Journal said, citing one person familiar with the matter. A Gannett spokeswoman declined to comment. Greenberg could not immediately be reached for comment. Tribune recently posted lower-than-expected third-quarter revenue, joining other newspaper publishers in reporting weak advertising sales. One preliminary offer was put in by a private equity group made up of Texas Pacific Group and Thomas H. Lee Partners, one source familiar with the situation has told Reuters. Another offer was put in by a group consisting of Madison Dearborn Partners, Providence Equity Partners and Apollo Management, a separate source close to the situation has said. Private equity group Bain Capital also put in a bid and the Carlyle Group has also looked at Tribune, sources have said. BILLIONAIRES' BALL Greenberg joins a list of other wealthy individuals expressing interest in the struggling newspaper industry. Los Angeles billionaire philanthropist Eli Broad and fellow billionaire Ron Burkle have made a bid to buy newspaper publisher and broadcaster Tribune Co., a source close to the situation has previously told Reuters. (Please see the story at ). The news of a bid by Broad and Burkle, a grocery store chain investor, came a day after Los Angeles Times editor Dean Baquet said he would leave the paper, which is one of Tribune's biggest properties, after Baquet lost a battle to resist job cuts. (Additional reporting by Megan Davies and Robert MacMillan )

Daimler's Mercedes enjoys monthly sales record in March. "We again topped the strong result of the previous year and have posted the best month in our company's history to date. We have never sold as many vehicles in a single month," Mercedes sales chief Joachim Schmidt said in a statement on Friday. Thanks to the 6.5 percent increase last month, Mercedes marked a new record high in first-quarter car sales at 324,898 vehicles for a gain of 3.5 percent. Although Mercedes may be growing its business, a claim many of its mass market peers cannot stake, the German premium brand has watched the gap with rivals BMW ( BMWG.DE ) and Audi ( VOWG_p.DE ) continue to grow mainly due to Mercedes problems in China. Sales in China gained over 5 percent last month but this still left a near 12 percent decline overall for the quarter. A key element in Daimler's strategy to retake the top spot from BMW by 2020 is the new family of Mercedes-Benz compact vehicles that include the CLA four-door coupe, which hits markets starting April 13. Sales of its A- and B-Class compact siblings jumped 49.4 percent in the first quarter, according to Daimler. (Reporting By Christiaan Hetzner)

Exclusive: UBS was mystery lender for Thai group's Ping An deal - sources. The Swiss bank's financial backing for the biggest foreign purchase of Chinese stock explains how a Thai conglomerate scraped together $7.4 billion in cash for the deal's final payment, after its main lender backed out at the 11th hour. The rescue role the bank played in CP Group's acquisition of HSBC's 15.6 percent stake in Ping An Insurance Group Co of China was not disclosed by the companies. People with direct knowledge say that UBS AG backed the deal with two financing facilities, the major piece being a five year, roughly $5.5 billion loan. The short term facility was a bridge loan that was replaced by longer term financing, the people say. At $5.5 billion, the short term facility would have been the fourth largest Asia Pacific bridge loan on record, according to Thomson Reuters data. For the help it provided, UBS is set to earn another milestone. People familiar with the matter say the bank is expected to reap, over time, about $100 million in arranging fees alone, a massive amount for one bank on a single deal. In estimated fee terms, that is more than Deutsche Bank earned from four investment banking divisions in Asia-Pacific in the first quarter of 2013, according to estimates by Thomson Reuters/Freeman Consulting. Such an extraordinary arrangement with a prized client, Thai billionaire Dhanin Chearavanont, is both a rare move for UBS and signals a key shift in strategy for the bank. The Dhanin deal shows that the investment bank is focusing more on high margin transactions than standard deal flow. The aim is to cater more to faithful, fee-paying clients and constructing deals for them that may be higher in risk, but also higher in reward. "This is certainly something they have the skill to do and it makes sense," said Peter Kennan, who runs Hong Kong-based hedge fund Black Crane Investment Management. "The straight vanilla business is going to remain tough and there are many off piste high margin opportunities that they could capture." The strategy, taken on by rivals as well, comes at a time when investment banking revenues are under pressure, in part from a drop in the high-fee business of equity capital markets banking across Asia and other parts of the world. A jumbo loan for UBS, backed by the borrower's assets, is new turf for the bank, known more for its M&A skills and equity capital markets prowess in the region. UBS declined to comment for this story. CP Group also declined to comment. THE QUESTION UBS's secret role in the saga is just one of several plot twists that emerged in HSBC's sale of its stake in Ping An, the world's second-largest insurer by market value. On December 5, HSBC Holdings Plc announced that affiliates of Dhanin's conglomerate Charoen Pokphand Group (CP Group) agreed to buy the Ping An stake for $9.4 billion, and to pay nearly $2 billion up front. The remainder was to come early in 2013, pending approval from China's insurance regulator. The deadline for approval was set for February 1. According to the December 5 statement, the second installment was backed by a branch of state lender China Development Bank Corp. Three weeks later, Chinese magazine Caixin published a story based on anonymous sources saying that the up-front payment came from entities not directly affiliated with CP Group. Beijing was under pressure to clean up corruption, and China Development Bank did not want to take any chances. People familiar with the situation say the bank backed out of its loan in early January. HSBC announced on February 1 that China's insurance regulator had granted approval, with final payment coming in five days. The HSBC release made no mention of China Development Bank. The question quickly surfaced: Without China Development Bank, how did Dhanin secure the $7.4 billion? The official line was that CP Group managed to fund the last installment itself. But doubts about that explanation lingered. THE ANSWER Although Dhanin is Thailand's richest man with a net worth of $14.3 billion according to Forbes, coming up with $7.4 billion on his own was out of the question, people familiar with the matter said. He and UBS began discussions on financing in early January, they said. Dhanin is a private banking client of UBS and the bank has worked with him and his various corporations for at least a decade on stock offerings, restructurings and acquisitions. UBS was already the sole M&A adviser to CP on the Ping An deal, a role that would earn the bank around $25 million in advisory fees, according to Thomson Reuters data. Dhanin's last-minute snag quickly turned UBS into a lender as well. According to people familiar with the matter, UBS arranged a short-term facility, crafted in order to show the seller and the regulators that Dhanin had the cash on hand to pay the final amount. A long-term financing facility then replaced the first one, once the deal was approved and the two parties knew it would go through without issue. That second facility is a five-year, roughly $5.5 billion loan, with a few other financing products attached, including a hedging mechanism, according to the people familiar with the matter. A financing package of that size, huge in any market, was so large that Zurich-based UBS Chief Executive Sergio Ermotti signed off on the deal personally, the people said. Part of the roughly $5.5 billion loan was syndicated to UBS private banking clients, the people said, so that UBS is not exposed to the entire amount. Dhanin and CP Group came up with the remaining cash needed for the final $7.4 billion payment. For UBS, backing the loan is Dhanin's personal wealth and the various corporate entities he controls, including several publicly traded companies. The hedging part of UBS's financing package, the people say, was put in place to protect Dhanin's financial interests if Ping An's shares fall below a certain level. The details of the package were privately negotiated and only a few senior bankers and executives are aware of the precise, complex details. "The client had an issue, and UBS provided a solution. And UBS will be paid a fee for that solution," said one of the people familiar with the deal. (Additional reporting by Kane Wu of Basis Point, and Clare Baldwin , Stephen Aldred , Nishant Kumar and Khettiya Jittapong; Editing by Edmund Klamann and Michael Urquhart )

"Green" car maker Fisker fires 75 percent of workforce. Fisker, which raised $1.2 billion from investors and tapped nearly $200 million in government loans, has "at least" $30 million in cash on hand, according to a source familiar with the company's finances. About 160 workers were fired at a Friday morning meeting at Fisker's Anaheim, California, headquarters, according to a source who attended the meeting. They were told that the company could not afford to give them severance payments. Fisker confirmed in a statement that it let go about 75 percent of its workforce but did not specify the number of workers affected. It called the move "a necessary strategic step in our efforts to maximize the value of Fisker's core assets." "Unfortunately we have reached a point where a significant reduction in our workforce has become necessary," Fisker said, adding that it was still searching for a strategic partner. The mass termination triggered a lawsuit seeking class-action status from angry former employees. A lawyer for the fired employees said he expects the company to file for bankruptcy "sooner rather than later." A Fisker representative could not immediately answer questions on the company's financial position. In the past, the automaker has declined to comment on the possibility of a bankruptcy restructuring. The layoffs, which hit departments including engineering, public relations and marketing, are the latest symptom of Fisker's cash crunch. In late March, Fisker put its entire U.S. workforce on furlough. It also hired law firm Kirkland & Ellis to advise on a possible bankruptcy filing. Fisker asked 53 senior managers and executives to stay on board, primarily to pursue buyers for the company's assets, according to the source who attended Friday's meeting in Anaheim. The remaining Fisker executives also are continuing negotiations with the U.S. Department of Energy. CHALLENGES Friday's class action is one of several challenges Fisker has faced over the past month. In March, company founder Henrik Fisker abruptly resigned, citing "several major disagreements" with top management. The lawsuit accuses the automaker of violating the Worker Adjustment and Retraining Notification or WARN Act, which requires 60 days' notice for mass layoffs. The lawsuit seeks 60 days' worth of unpaid wages and other benefits, as well as interest. Jack Raisner, an attorney for the plaintiffs, told Reuters that the termination is a "harbinger" of likely bankruptcy. Raisner, who represented employees of Solyndra, the government-backed solar panel maker that terminated its employees shortly before filing for bankruptcy in 2011, said Fisker's current situation is similar to Solyndra's final days. "It feels like almost deja vu," he said. The Energy Department's loan program has been under scrutiny ever since Solyndra's bankruptcy. Since then, other U.S.-backed companies have gone bankrupt, notably Fisker's battery supplier formerly known as A123 Systems and now called B456 Systems Inc. APRIL 22 PAYMENT LOOMS Fisker, which was founded in 2007, hopes to renegotiate a DOE loan payment due on April 22, which the source familiar with Fisker's finances said was around $10 million. In 2009, the DOE awarded Fisker a $529 million loan as part of a U.S. program to finance advanced vehicle development. Fisker pledged its assets, including equipment and property, as collateral on the DOE loan, according to the loan agreement dated September 18, 2009. The company's flagship vehicle, the $100,000-plus Karma plug-in hybrid, quickly won accolades for its styling and cachet with celebrities, including pop star Justin Bieber and actor Leonardo DiCaprio, who is also an investor in the company. Fisker used $193 million of the DOE loan and earmarked the rest for a second plug-in hybrid, the Atlantic, but the DOE froze the credit line after delays in launching the Karma. The last payment from the DOE came in May 2011. "The Department of Energy stopped payment on the federal loan in 2011 after Fisker stopped meeting their milestones, and is committed to the best outcome for taxpayers," DOE spokeswoman Aoife McCarthy said in a statement. "Despite Fisker's difficulties, our overall loan portfolio of more than 30 projects continues to perform very well, and more than 90 percent of the $10 billion loan loss reserve that Congress set aside for these programs remains intact," she said. Fisker has not produced a car since July and has been seeking a financial backer to help finish the development of the Atlantic and produce it at a Delaware plant. Chinese automakers Dongfeng Motor Group Co Ltd and Zhejiang Geely Holding Group both considered buying a majority stake in Fisker, but they balked at the terms of Fisker's loan agreement with the DOE. [ID:nL3N0CK7F8] (Additional reporting by Nick Brown in New York and Paul Lienert in Detroit; editing by Jeffrey Benkoe and Matthew Lewis )

Ex-broker for Merrill, Deutsche Bank told to pay investor $11 million. The investor's case against former broker Karl Hahn stems from transactions involving covered calls, a variable annuity and other investments, according to a ruling by a Financial Industry Regulatory Authority (FINRA) arbitration panel. The investor, Chase Bailey, filed the case in 2011, also naming Bank of America Corp's ( BAC.N ) Merrill Lynch unit, Deutsche Bank Securities Inc, a unit of Deutsche Bank AG ( DB.N ) and Oppenheimer & Co. Hahn worked at the three firms consecutively for roughly seven years between 2004 and 2011, according to his public disclosure record. The case against Merrill was settled, while those against Deutsche Bank and Oppenheimer were dismissed, according to the ruling. "Mr. Bailey is pleased with the award and hopes it serves as a deterrent to future improper conduct," said Michael Perry, the investor's Boston-based lawyer. Hahn's alleged conduct toward Bailey, who is an internet entrepreneur and now a New Hampshire-based filmmaker, occurred while the broker worked at all three firms, Perry said. Efforts by Reuters to reach Hahn for comment on Friday were not successful. A Merrill spokesman declined to comment. A Deutsche Bank spokeswoman said the firm terminated Hahn after becoming aware of professional misconduct. A spokesman for Oppenheimer was not immediately able to comment. Oppenheimer terminated Hahn in 2011, according to regulatory filings. Arbitrators awarded the investor some $4.1 million in compensatory damages and $6.4 million in punitive damages, according to the ruling dated on Tuesday. Punitive damages awards, aimed at deterring misconduct, are rare, say lawyers. The decision is the second against Hahn in two months. FINRA arbitrators, held Deutsche Bank and Hahn jointly responsible in February in a $934,000 ruling on behalf of a couple and their trusts, who alleged he swindled them in a multimillion-dollar insurance deal. (Reporting by Suzanne Barlyn. Editing by Andre Grenon)

Instant View: March nonfarm payrolls rose by 88,000. The economy added just 88,000 jobs last month and the jobless rate ticked a tenth of a point lower to 7.6 percent largely due to people dropping out of the work force, Labor Department data showed on Friday. Analysts polled by Reuters had expected a gain of 200,000. KEY POINTS: February data has been revised to 268,000 from 236,000, January to 148,000 from 119,000. The household survey showed workforce down by 496,000 in March, compared with a decline of 130,000 in February COMMENTS: ADAM BUTTON, A CURRENCY ANALYST AT FOREXLIVE, IN MONTREAL: "The market has been sniffing out a soft reading, so it's less of a shock than it might seem. But the market is seeing some extremely large moves in the U.S. dollar. Remember the Bank of Japan has left the market especially jittery." "The temptation will be to blame it on the sequester, and that might be a small portion of it. But I believe the cold weather and the early Easter holiday were larger factors." "The commentary from the Fed has been optimistic in recent months. I think we see a shift in that and hear less talk about tapering asset purchases by the end of the year." MOHAMED EL-ERIAN, CO-CHIEF INVESTMENT OFFICER AT PACIFIC INVESTMENT MANAGEMENT CO., NEWPORT BEACH, CA.: "Notwithstanding favorable revisions, the report will fuel concerns about another spring swoon for the economy, the adverse impact of Congressional dysfunction and, more generally, the weak underlying dynamism of the economy. "The fall in the labor participation rate is particularly worrisome. "This report will dampen some of the recent talk on a tapering of the experimental policies pursued by the Federal Reserve and by an increasing number of other central banks around the world. JOHN KILDUFF, PARTNER, AGAIN CAPITAL LLC IN NEW YORK: "The report is a real disappointment due to the small increase in new jobs and the generational low in the participation rate. "The recent decline in crude oil prices seemed to foreshadow this negative data point and the outlook for energy demand growth will be impaired as a result. "The view that Federal Reserve is readying a pullback in easing measures because of the recent improvement in employment will also be tabled, which lend support to commodity prices in the future, but, for now, inflation pressures will continue to be lacking due to poor job creation." PETER JANKOVSKIS, CO-CHIEF INVESTMENT OFFICER, OAKBROOK INVESTMENTS LLC, LISLE, ILLINOIS: "The unemployment number is not meaningful in this environment. "This is not a sign we're going backwards, but it suggests the slope of the recovery is lower than people might have hoped for after the first quarter's numbers." CRAIG DISMUKE, CHIEF ECONOMIC STRATEGIST, VINING SPARKS, MEMPHIS, TENNESSEE: "This is a very disappointing number. It looks to me in January and February, we saw unseasonably strong activity. Now we are paying back in March. We might finally be seeing the impact of sequestration cuts and the tax hikes in the beginning of the year. Looks like we are going to have another spring slowdown. This keeps the Fed in play, which should be supportive of stocks and bonds." BRUCE MCCAIN, CHIEF INVESTMENT STRATEGIST AT KEY PRIVATE BANK IN CLEVELAND, OHIO: "It is shockingly weak, but part of the problem was that expectations were bolstered by our strong first quarter. We're back to the cautious side. This is probably below the trend, but we mistook above-trend numbers for a major improvement in the economic backdrop that didn't occur. This adds fundamental concerns to concerns we had about prices having gotten ahead of themselves, which creates the potential for even further declines." MARKET REACTION: STOCKS: U.S. stock index futures extended losses BONDS: U.S. bond prices extended gains FOREX: The dollar extended losses versus the euro Graphic - U.S. nonfarm payrolls: U.S. payrolls grew by 88,000 in March. link.reuters.com/ram54t (Americas Economics and Markets Desk; +1-646 223-6300)

S&P posts 2013's worst weekly drop on jobs data. The jobs data, which showed employers hired at the slowest pace in nine months, was the latest in a series of disappointing economic reports. Companies begin to report quarterly earnings next week, which is likely to be another concern for investors in light of recent economic data. Analysts' estimates for earnings growth in the first quarter have fallen since late last year, according to Thomson Reuters data. "I think earnings season could be less than stellar again. Given market performance to date, we could see some softness in the market because we've generated some healthy returns already," said Natalie Trunow, chief investment officer of equities at Calvert Investment Management, which has about $13 billion in assets. Stocks had been rallying on the Fed's promise to keep providing stimulus and on mostly improving U.S. economic data. The S&P 500 is up 8.9 percent since the start of the year. The S&P 500 was down 1 percent for the week. All but three of the S&P 500's 10 industry sectors posted declines. The government's job report showed 88,000 jobs were added in March, less than half economists' average forecast of 200,000. The unemployment rate dipped to 7.6 percent from 7.7 percent, largely due to people dropping out of the work force. Among recent weak data, a report Monday showed U.S. factory activity grew at the slowest rate in three months in March. The S&P's biggest percentage decliner was network gear maker F5 Networks Inc ( FFIV.O ), which dropped 19 percent to $73.21 a day after forecasting quarterly earnings and revenue well below Wall Street's expectations. The Dow Jones industrial average .DJI was down 40.86 points, or 0.28 percent, at 14,565.25. The Standard & Poor's 500 Index .SPX was down 6.70 points, or 0.43 percent, at 1,553.28. The Nasdaq Composite Index .IXIC was down 21.12 points, or 0.66 percent, at 3,203.86. For the week, the Dow declined 0.1 percent while the Nasdaq dropped 1.9 percent. The Russell 2000 index .TOY fell 3 percent for the week, its worst weekly decline since June. Several of F5's competitors were also sharply lower, with Juniper Networks ( JNPR.N ) off 3.1 percent at $17.55 and Citrix Systems ( CTXS.O ) down 1.2 percent at $68.90. Airline stocks were hit after J.P Morgan Securities cut its revenue expectations for U.S. airlines by 2 percent to 3 percent for 2013 and 2014 and said it expects monthly revenue per available seat mile to turn negative for some airlines, partly due to the federal government's automatic spending cuts. Delta Airlines Inc ( DAL.N ) fell 2.4 percent to $14.39 and United Continental Holdings ( UAL.N ) was off 0.1 percent at $29.27. S&P 500 earnings are expected to have risen just 1.6 percent in the first quarter from a year ago, according to Thomson Reuters data, down from a 4.3 percent forecast in January. Earnings grew 6.3 percent in the fourth-quarter, which was better than a late projection by analysts. Volume was roughly 6.4 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the average daily closing volume of about 6.36 billion this year. Decliners outpaced advancers on the NYSE by about 15 to 14 and on the Nasdaq by roughly 5 to 3. (Reporting by Caroline Valetkevitch; Editing by Nick Zieminski and Kenneth Barry)

Bankruptcy judge approves MF Global's liquidation plan. The commodities brokerage, run by former New Jersey Governor Jon Corzine, collapsed after investors were spooked by its exposure to about $6.3 billion in European sovereign debt. The approval marked a major step in ending the massive Chapter 11 filing, as MF Global is now able to implement the plan and pay creditors. Judge Martin Glenn approved the plan at a hearing in U.S. Bankruptcy Court in Manhattan, after noting the "long road" to confirmation. "While there have been some very strongly held views and differences, counsel have worked exceedingly well together to resolve most of them, limiting what the court had to decide," Glenn said. The case became a political fire storm after it was discovered that about $1.6 billion was missing from the accounts of the broker's commodities trader customers. Regulators later determined that MF Global had misappropriated the customer money to cover liquidity gaps as it faltered. RARE APPEARANCE BY FREEH Louis Freeh, the trustee liquidating MF Global's estate, made a rare public appearance at Friday's court hearing, providing some reassurance to customers. "I do firmly believe the customers in this case will be made whole," said Freeh, the former FBI director. Most customers have already been reimbursed for about 93 percent of the value of their accounts. While Corzine has not faced criminal charges, he and several other MF Global officials have been ordered to testify at numerous congressional hearings. Also, congressional committees, the FBI and the Securities & Exchange Commission have launched investigations into the source of missing customer money. No criminal charges have been filed in connection with the case, and Corzine has denied wrongdoing. Regulators have placed some of the blame for the company's downfall on Corzine. On Thursday, Freeh released a report pointing to his negligence, citing "the risky business strategy engineered and executed by Corzine and other officers and their failure to improve the company's inadequate systems. The report came several months after a similar account from James Giddens, the trustee working to recover money for the broker-dealer's trader customers, which concluded that Corzine mismanaged the firm's growth. Corzine is facing civil lawsuits from Giddens and former customers. The plan approved by Glenn on Friday lays out how MF Global will pay back corporate creditors like lenders and bondholders. JPMorgan Chase & Co, agent on a $1.2 billion revolving credit facility, is a key player. Last month, the bank reached a settlement with Freeh under which MF Global agreed to subordinate part of its intercompany claim against its finance unit as a means of increasing JPMorgan's projected recovery. The deal avoided an objection from JPMorgan that could have been a hurdle in the plan's confirmation, raising the bank's payout forecast to as much as 76 percent of its total claim, from 73 percent previously. But the settlement meant less of a payout for unsecured creditors of MF Global's finance unit, who will see their maximum recovery dip to 34.4 cents on the dollar from 39 cents previously. Unsecured creditors of MF's parent entity have a maximum projected recovery of roughly 34 percent of claims. MINOR CHANGES The company's creditor payout plan was proposed earlier this year by a group of its hedge fund creditors, led by Silver Point, Knighthead and Cyrus. Freeh cooperated with the hedge funds on later drafts of the plan. Going into Friday's hearing, the plan faced objections from the U.S. Trustee Program, the Department of Justice's bankruptcy watchdog, as well as from Preet Bharara, the U.S. Attorney for the Southern District of New York. Both parties were concerned about language in the plan that released third parties from certain legal claims. The objections were withdrawn after MF Global agreed to add language narrowing the releases. Specifically, the releases must not hinder the "government's criminal, police and regulatory powers," Judge Glenn ordered. The U.S. Trustee also raised concerns about MF Global's proposal to use part of the proceeds of the plan to pay the legal fees of the hedge funds creditors who first proposed it. Glenn deferred judgment on that point. An additional change negotiated by MF Global and its creditors will raise the amount of financing to fund MF Global's wind-down to $80 million from $70 million. The case is In re MF Global Holdings Ltd, U.S. Bankruptcy Court, Southern District of New York, No. 11-15059. (Reporting by Nick Brown in New York; Editing by Jeffrey Benkoe)

Hedge fund manager Ackman says mistakes made in JCPenney turnaround. The "criticism is deserved," Ackman said on Friday of Johnson, a former Apple executive who has come under fire for his dramatic plans to overhaul the staid retailer with cost cuts, more fashionable merchandise and a new pricing strategy. The stock price has plummeted 27.6 percent in the first quarter as Johnson's plans alienated JC Penney's core clientele and has not resonated with new shoppers. "One of the big mistakes was perhaps too much change too quickly without adequate testing on what the impact would be," Ackman said on Friday at an investment conference sponsored by Thomson Reuters. After months of being a public cheerleader for Johnson, often saying that he was a doing a great job, the fund manager tempered his normally upbeat comments on Friday. Speaking bluntly, Ackman, who sits on the JC Penney board and whose $12 billion Pershing Square Capital Management is the company's largest shareholder, said big mistakes have been made remaking the 110 year-old retail brand. JC Penney traditionally drew in customers with big sales and coupons but Johnson has been criticized for eliminating those in favor of every day low prices. The company has now brought back their old pricing strategy to try to bring shoppers back. Ackman said that Johnson faces one of the toughest challenges in corporate America in cutting costs and changing the merchandise and that "the impact has been, on a consolidated basis, very close to a disaster." Right now Johnson is "working very aggressively with his team to fix the mistakes that have been made, and there have been some big mistakes," Ackman said. JC Penney did not immediately respond to a request for comment. JC Penney's stock price climbed 3.3 percent on Friday to $15.57 in late afternoon trading. Ackman, a favorite with pension funds and wealthy investors, has come under criticism for bets on retailers in the past, including bets on Target and bookseller Borders a few years ago. Currently Pershing Square is sitting on roughly $500 million in paper losses in JC Penney. "If you get a retailer fixed and you can replicate it, it's about the best way to make money," he said. While JC Penney's losses are making headlines, Ackman's portfolio gained 6.1 percent during the first quarter thanks to bets on Canadian Pacific Railway and Procter & Gamble. In a nod to his ongoing commitment to JC Penney's fortunes, the billionaire investment manager wore socks purchased at JC Penney. HERBALIFE BATTLE At the conference Ackman was also asked about his other high profile investments, including nutritional supplements company Herbalife on which Pershing Square has a $1 billion short bet, expecting the multi-level marketing company's share price will move to zero. The investment has been the talk of Wall Street in recent months as other well-known hedge fund managers, including Carl Icahn and Daniel Loeb, moved to the other side of the bet with long positions in Herbalife. "Taking a short position and going public with it is a pretty serious business," Ackman said. "Did I think a group of hedge fund managers would take the other side of the trade and try to orchestrate a short squeeze? No, I didn't think that," Ackman said. Short-sellers borrow shares and sell them, seeking to profit by returning them after buying them back at a lower price. A short squeeze occurs when the share price rises instead, forcing the borrowers to try to buy them back at a higher price, thus pushing the share price even higher. Talking about the public feud over Herbalife, Ackman said that the $2.25 trillion hedge fund industry, once close-knit where managers often worked collaboratively, now seems much more competitive. "This was the first case where there was a lot of sniping going on between managers," he said, referring to the recent backbiting over the Herbalife trade. But he acknowledged that hedge fund managers can't be overly sensitive. "You have to have thick skin to be in this business." (Reporting by Svea Herbst-Bayliss and Katya Wachtel; Editing by Phil Berlowitz)

Weak job gains hurt economic outlook. Payrolls expanded by just 88,000 last month outside the farming sector, the Labor Department said on Friday. That was well below market expectations for a 200,000 increase and fell short of even the most pessimistic forecast in a Reuters poll. The jobless rate ticked a tenth of a point lower to 7.6 percent largely due to people dropping out of the work force. "The U.S. economy just hit a major speed bump," said Marcus Bullus, trading director at MB Capital in London. Some of the weakness appeared due to higher tax rates that took effect in January. While recent reports have pointed to relatively buoyant retail sales in January and February, Friday's data showed retailers actually cut staff in March by 24,100, making it the hardest-hit sector last month. Moreover, the government said hiring in the retail sector was weaker in January and February than initially thought. The report rattled investors and sent U.S. stocks lower, contributing to the biggest weekly decline for share prices this year. Benchmark Treasury debt yields fell to their lowest this year and the dollar declined against a basket of currencies. It was unclear whether across-the-board federal budget cuts that began in March played a role in the weak pace of hiring, although nervousness over the cuts might have made businesses shy about taking on more staff. Some economists cautioned against reading too much into the report, though the data nonetheless raised questions over whether the strong hiring seen in the winter actually meant the economy had shifted into a higher gear. "We don't think there is enough signal here to conclude the U.S. economy is wobbling. Rather, it appears that the underlying trend has not improved as much as the January-February data suggested," said Julia Coronado, an economist at BNP Paribas in New York. AMMUNITION FOR THE FED March's slowdown in job growth could make policymakers at the Federal Reserve more confident about continuing a bond-buying stimulus program. Prior advances in the labor market recovery had fueled discussion at the central bank over whether to dial back the purchases, perhaps as soon as this summer. "This could give them the green light to stay with this policy longer," said Brian Rehling, chief fixed income strategist at Wells Fargo Advisors in St. Louis. The employment report did have some positive news for the economy. The Labor Department revised readings for January and February to show 61,000 more jobs added than previously estimated. The average workweek rose to its highest level in a year. "Companies ramped up working hours instead of hiring additional people. The fact that labor demand kept rising should bode well for future job gains," said Harm Bandholz, chief U.S. economist at UniCredit Research in New York. The construction sector added 18,000 jobs, reinforcing the view that a recovery in the housing sector has become entrenched. Separate reports on Friday also gave upbeat signals. The U.S. trade gap narrowed in February due to rising exports and falling crude oil imports, while U.S. consumer credit that month recorded its biggest increase in half a year. AUSTERITY'S BITE But analysts point out that federal spending cuts have only just begun and will be a more substantial drag on the economy between April and June, when many government workers begin taking days off work without pay. In March, government payrolls fell only 7,000, partly reversing a 14,000-job gain from February. The Congressional Budget Office has estimated that tighter fiscal policy will subtract about 1.5 percentage points from economic growth this year. "The trend in payrolls is consistent with our expectation that employment growth will slow somewhat in coming months (due to) the large, and increasing, fiscal drag," said Michael Gapen, an economist at Barclays in New York. Fed Chairman Ben Bernanke, who has said the labor market must show sustained improvement before monetary stimulus is eased, has voiced concern about the spending cuts. The jobless rate fell to its lowest since December 2008, but the report showed that much of the drop was due to the labor force shrinking by 496,000 people. That pushed the labor force participation rate - the percentage of working-age Americans either with a job or looking for one - to 63.3 percent, its lowest since 1979. The unemployment rate is derived from a survey of households which is separate from the survey of employer payrolls. The household survey actually showed employment fell by 206,000 in March. Some of the people dropping out of the labor force are retiring or going back to school, but others have given up the job hunt out of discouragement. (Additional reporting by Doug Palmer and Lucia Mutikani in Washington; and by Richard Leong in New York; Editing by Andrea Ricci and David Gregorio )

Analysis: No Plan B in Japanese central bank's new playbook. The Japanese central bank unleashed the world's most intense burst of monetary stimulus at Kuroda's first rate review on Thursday, promising to inject about $1.4 trillion into the economy in less than two years in a radical gamble that sent the yen reeling and bond yields to record lows. The BOJ has not ruled out more stimulus should the economy face a severe market shock, such as a sudden yen spike, but the threshold for action has become much higher and any future steps would be within the framework established on Thursday, say officials familiar with its thinking. "It's a different world from when the BOJ acted bit by bit. It offered all it has on Thursday, so there's no such thing as 'what's next' here," one official said on condition of anonymity as he is not authorized to speak publicly. While aware of the risk of using all its ammunition at once, the board decided to back Kuroda's "big bang" approach that is based on the belief that when the central bank acts, it must use all its resources to maximize the market impact, the officials say. That said, central bankers do not yet have a clear strategy on how to respond if a yen spike or a global slump pushed the export-reliant economy back into recession and threatened the goal of getting inflation to 2 percent in two years. Some market players still expect the central bank to come under pressure for further easing in October, if its quarterly review of its long-term economic and price forecasts shows that 2 percent inflation remains distant. But the officials said that Kuroda's BOJ no longer sees such quarterly reviews as key triggers for policy action. FED STYLE Kuroda made it clear there would be no follow-up stimulus anytime soon, telling reporters on Thursday that the BOJ had taken "all available steps" it could think of. He also replaced the BOJ's usual line that it would ease again if economic conditions warranted, instead saying the central bank would "make adjustment" to policy as needed -- a sign there would only be tweaks to the new framework, not a series of regular policy changes. "As for future BOJ policy, the word 'adjustment' says it all," another official said. Some analysts say Kuroda's approach is similar to that of U.S. Federal Reserve Chairman Ben Bernanke, who would launch a "big bang" stimulus, monitor its effect for at least half a year or so and embark on another big program if the need arises. The difference is that with Thursday's measures, the BOJ has left itself with very few avenues to boost asset buying. The BOJ scrapped a limit on the duration of government bonds it targets and will buy 7.5 trillion yen ($78 billion) of bonds per month, roughly 70 percent of bonds sold in markets. Number-crunching inside the BOJ showed that was the maximum amount the bank thought it could realistically buy, sources said, which means further increases in bond buying are highly unlikely. The central bank also boosted purchases of exchange-traded funds and real-estate trust funds, and some analysts expect it may opt to boost purchases of such riskier assets if it were to ease again. With markets for these assets relatively small, however, the BOJ will not be able to achieve the same effect. Loading up on such assets would also expose its balance sheet to bigger losses because their prices tend to be more volatile than bonds. "The BOJ is essentially pushing investors out of the bond market and forcing them to put their money somewhere else," said Izuru Kato, chief economist at Totan Research in Tokyo. "It's already heavily distorting markets and that's the cost it decided to pay. What happens next, though? There's really no options left for the BOJ." (Editing by John Mair )

Factbox: Boeing's path to placing 787 back in service. Japanese airlines All Nippon Airways ( 9202.T ) and Japan Airlines ( 9201.T ) are the two biggest Dreamliner customers. ANA, the launch customer, will be the first to have its jets fixed. Here are the steps that Boeing, aviation authorities and the airlines are expected to go through before the aircraft can return to the air, according to Japan's Civil Aviation Bureau, the European Aviation Safety Agency and other sources. BOEING CARRIES OUT AND COMPLETE TESTS Boeing is conducting ground and flight tests to check the new lithium-ion battery system that it plans to install in the Dreamliner jets. Boeing said earlier this week more than half of the testing is complete with the remaining ground and flight tests set to occur within several days. On Friday, Boeing engineers accompanied by FAA personnel were carrying out what Boeing called a "final" certification test flight. BOEING SUBMITS TEST RESULTS TO AUTHORITIES FOR ASSESSMENT Boeing will submit the test results, data and analyses to the U.S. Federal Aviation Administration (FAA), Japan's Civil Aviation Bureau (CAB) and the European Aviation Safety Agency (EASA). The authorities will then assess whether to certify the proposed new battery system. CAB official Shigeru Takano said on Friday that he cannot predict how long it will take for the authorities to reach a decision. AUTHORITIES CERTIFY THE PROPOSED FIX Once the assessment is done, the three leading aviation safety authorities could decide to certify the proposed fix. The certifications are likely to come around the same time. FAA APPROVES BOEING'S "SERVICE BULLETIN" The "service bulletin" is a document to be prepared by Boeing that contains technical information and detailed explanations of the battery system fix. The FAA will need to approve this. Once approved, Boeing will issue the bulletin to its customers that operate the Dreamliner. AUTHORITIES REVISE AIRWORTHINESS DIRECTIVE The FAA on January 16 issued an emergency airworthiness directive that grounded the Dreamliner until operators can demonstrate the lithium-ion batteries are safe. Japan's CAB, Europe's EASA issued similar directives, which in Japan's case is known as a "technical circular directive." Once the fix is certified and the service bulletin is approved, the FAA is likely to revise that airworthiness directive. How exactly it will do so has yet to be decided, but the FAA could note in the airworthiness directive that Dreamliner operators cannot fly the aircraft until certain fixes are installed onto the jet, CAB's Takano said. Sources say Japanese and European agencies are likely to announce similar actions. BOEING ENGINEERS INSTALL THE NEW BATTERY SYSTEM Boeing engineers, working with airlines, will install the new battery system onto the Dreamliners. A few dozen Boeing engineers are already in Japan so they can start work on the battery fix as soon as approval is received, sources have told Reuters. AIRLINES DECIDE WHEN TO RESUME DREAMLINER FLIGHTS Once the new battery system is installed onto the aircraft, each airline will decide on the timing of bringing the Dreamliner back into the air. Anticipating regulatory clearance, ANA will put its roughly 200 Dreamliner pilots through flight resumption simulator training so that they will be ready to fly the jets again in June, sources with knowledge of the company's operations have told Reuters. (Reporting by Yoko Kubota , Tim Hepher ; Editing by Matt Driskill)

Fisker Automotive fires most rank-and-file employees. In a statement, Fisker confirmed that it let go about 75 percent of its workforce. The automaker said it was "a necessary strategic step in our efforts to maximize the value of Fisker's core assets." A Fisker representative could not immediately answer questions on the company's financial position. In the past, the automaker has declined to comment on the possibility of bankruptcy. Fisker, which raised $1.2 billion from investors and tapped nearly $200 million in government loans, has "at least" $30 million in cash, plus $15 million due after settling a claim this week with bankrupt battery maker A123 Systems Inc AONEQ.PK, according to a source familiar with the company's finances. About 160 employees were terminated at a Friday morning meeting at Fisker's Anaheim, California, headquarters, according to a second source who attended the meeting. They were told that the company could not afford to give them severance payments. Fisker asked 53 senior managers and executives to stay on board, primarily to pursue buyers for the company's assets, the source said. The remaining Fisker executives also are continuing negotiations with the U.S. Department of Energy. The company hopes to renegotiate a DOE loan payment of about $10 million that is due on April 22, the source familiar with Fisker's finances said. Fisker last week hired law firm Kirkland & Ellis to advise on a possible bankruptcy filing, while executives continue their search for a strategic investor. The company, which makes the $100,000-plus Karma plug-in hybrid, has not produced a car since July and is seeking a financial backer to help finish the development of a second plug-in hybrid, the Atlantic, and produce it at a Delaware plant. Fisker has faced many challenges over the past month, including the abrupt resignation in March of its founder, Henrik Fisker, over "several major disagreements" with top management. Its efforts to find an investor in China also stalled. The company had been in talks with Chinese automakers Dongfeng Motor Group Co Ltd ( 0489.HK ) and Zhejiang Geely Holding Group GEELY.UL to gauge interest in acquiring a majority stake. Both Geely and Dongfeng balked at the terms of Fisker's loan agreement with the DOE. Fisker's chief executive, Tony Posawatz, visited China to try to rekindle those deals, sources said. Fisker, founded in 2007, has the backing of Ray Lane, a managing partner at venture firm Kleiner Perkins Caufield & Byers who is also a Fisker director. In 2009, the DOE awarded Fisker a $529 million loan as part of an Obama administration program to finance advanced vehicle development. Fisker used $193 million of the loan and earmarked the bulk of the funding for the Atlantic. The Karma quickly won accolades for its styling and cachet with celebrities, including pop star Justin Bieber and actor Leonardo DiCaprio, who is also an investor in the company. But the DOE froze its credit line partly due to Fisker's delays in launching the Karma. The last payment from the DOE came in May 2011, government records show. The resulting cash crunch made it tough for Fisker to meet what Posawatz described last year as an "overly ambitious and aggressive" business plan. Fisker has been flagging its interest in a strategic partner since at least April 2012, when then-CEO Tom LaSorda unveiled a concept version of the Atlantic at the New York auto show. LaSorda later left the company and was succeeded by Posawatz. Sources said this week that Fisker now is open to selling off pieces of the company, including intellectual property rights for its plug-in electric hybrid technology. (Additional reporting by Paul Lienert in Detroit; editing by Jeffrey Benkoe and Matthew Lewis )

BOJ's Kuroda: monetary onslaught won't cause asset bubbles. The yen weakened past 97 per dollar on Friday for the first time since August 2009, a day after the BOJ vowed to inject about $1.4 trillion into the economy in less than two years in a dose of shock therapy to end two decades of deflation. The Nikkei share average jumped as much as 4.7 percent, extending Thursday's 2.2 percent rise and breaking through 13,000 points for the first time since August 2008. The 10-year JGB yield fell as much as 12 basis points to a record low of 0.315 percent. "We will be vigilant of the risk of a bubble. I don't think there's a bond or stock market bubble now and I don't see one emerging any time soon. But we will be vigilant of the risk," Kuroda told the lower house of parliament. The BOJ's strategy to reach 2 percent inflation within two years was viewed as a radical gamble to revive the economy. It will buy about 7 trillion yen ($73 billion) of bonds per month, equivalent to about 1.4 percent of gross domestic product. By comparison, the U.S. Federal Reserve is buying $85 billion of bonds per month, about 0.6 percent the size of the economy. The central bank will also increase purchases of exchange-traded funds by 1 trillion yen per year and real-estate trust funds by 30 billion yen per year. "We think there is a risk of a bubble," said Hiroshi Shiraishi, senior economist at BNP Paribas Securities. "If these types of asset purchases are going to work, then they work by distorting asset markets." DEBT BUILD-UP A falling yen risks upsetting other Asian exporters who may lose competitiveness, and leave Japan open to accusations it is covertly devaluing the currency. Emerging economies will also be concerned about the potential flood of inflows as investors borrow cheaply in yen and then invest elsewhere, as they have done with the U.S. Federal Reserve's quantitative easing. The Fed and the Bank of England have also embraced large-scale bond purchases in an effort to boost growth, while the European Central Bank said on Thursday it would keep policy loose for as long as necessary to revive the struggling euro zone economy. "Like other central banks, the BOJ will carefully watch asset price moves, job and wage conditions and other data in striving to achieve price stability," Kuroda said in testimony that was effectively a re-application for his job. Kuroda's predecessor, Masaaki Shirakawa, was not due to step down until April 8, but decided to leave office in mid-March so the government could appoint a new governor and two deputies at the same time. A procedural quirk meant Kuroda was initially only appointed for the remainder of the Shirakawa's term, and now needs to be voted in again for a full five-year term. The overhaul of monetary policy means the BOJ's monthly government debt purchases will total about 70 percent of new debt issued by the government. Purchases of this scale will do a lot to keep yields low, but it also raises concerns that the BOJ has basically agreed to bankroll fiscal spending. At more than twice the size of its $5 trillion economy, Japan's public debt burden is already the worst among major economies. Politicians regularly talk about fiscal discipline, but have made little progress in trimming debt. Moody's Investors Service said on Friday that while the Japanese government's borrowing costs are likely to remain very low over the next two years, there are concerns about whether domestic savings can finance future government debt. When the BOJ announced its 2 percent inflation target in January, the government agreed to take steps to ensure sound fiscal policy. But so far, the government has been coy on the specific steps it will take to reign in debt. "Based on the joint statement, the finance ministry must proceed with firm fiscal plans so as not to damage our relationship with the BOJ," Finance Minister Taro Aso said on Friday. (Additional reporting by Dominic Lau and Tetsushi Kajimoto ; Editing by John Mair )

UK lawmakers call for ban on former bosses for HBOS failure. The Parliamentary Commission on Banking Standards, tasked with finding ways to reform UK banks, said HBOS was an "accident waiting to happen", with bad lending and losses across the business likely to have led to its insolvency even without the funding and liquidity problems of the financial crisis. The committee said regulators bore some of the blame, but primary responsibility lay with Dennis Stevenson, chairman from the formation of HBOS in 2001 until its collapse, and former chief executives James Crosby and Andy Hornby. There was a "colossal failure of senior management and the board", said Commission chairman Andrew Tyrie, a Conservative lawmaker who expressed surprise that only Peter Cummings, who was head of corporate lending at HBOS, had so far been punished. "The Commission has asked the regulator to consider whether these individuals should be barred from undertaking any future role in the sector," Tyrie said in the report published on Friday. Crosby was chief executive of HBOS between 2001 and 2006 before being succeeded by Hornby. The trio earned millions during their time at the bank and in subsequent roles. Crosby was paid close to 8 million pounds during his tenure as HBOS's chief executive. Hornby was earning 1.9 million pounds a year before leaving the bank, while Stevenson's package was worth over 800,000 pounds a year. Following the report, Crosby, 57, promptly resigned as an advisor to private equity firm Bridgepoint. He is also senior independent director at the world's biggest catering company, Compass ( CPG.L ), which declined to comment on whether he would keep his 125,000-pound-a-year position. Cummings was fined 500,000 pounds ($759,000) by Britain's financial services regulator in September and banned for life from the industry. HBOS, Britain's biggest mortgage lender, had to be rescued with a government-engineered takeover by rival Lloyds ( LLOY.L ), which subsequently needed a 20-billion-pound bailout to survive. Hornby, who since leaving HBOS, has worked as chief executive of healthcare group Alliance Boots, earning over 2 million pounds a year, and who currently runs betting shop chain Coral, declined to comment on the report. Coral, however, had nothing but praise for Hornby, 46, and a spokesman said his position was safe. "Coral is performing extremely well, and we are really pleased with the great job Andy is doing." Stevenson, 67, who sits in the upper chamber of parliament, could not be reached for comment. HBOS was created in 2001 by a merger between Halifax, a former mutually owned savings and loans firm, and the 300-year-old Bank of Scotland. It ramped up lending using cheap funding on the wholesale markets rather than safer customer deposits, and its high-risk strategy was exposed when that funding dried up following the collapse of U.S. investment bank Lehman Brothers in 2008. HBOS's managers blamed the financial crisis for the collapse, but the Commission said the bank's business model was inherently flawed and its board was a "model of self-delusion". "The sums would never have added up," Tyrie said. "The Commission has estimated that, taken together, the losses incurred by the corporate, international and treasury divisions would have led to insolvency, regardless of funding and liquidity problems, had HBOS not been bailed out by both Lloyds and the taxpayer," he said. The Commission said 25 billion pounds was lost on bad corporate loans, and there were losses of 15 billion at its international business and 7 billion at its treasury unit. The report said the role played by Britain's financial regulator had been "thoroughly inadequate". Britain's Finance Ministry said the failure of HBOS was a "symptom of the financial crisis and the regulatory system in place at that time". It said the introduction of a tighter regulatory regime would help prevent future failures. The responsibilities of the FSA have been passed to two new bodies, the Financial Conduct Authority and the Prudential Regulation Authority. ($1 = 0.6607 British pounds) (Editing by Will Waterman)

Ruling against BP clears way for appeal of spill payouts. Federal District Judge Carl Barbier said he found no reason to reverse his decision last month to uphold the payout process. This was despite BP's protest at payouts including $21 million for a Louisiana rice mill 40 miles from the coast which earned more revenue in 2010 than in any of the previous three years. The hearing in New Orleans federal court revisited a part of BP's liability laundry list that seemed settled last year when it agreed to terms on economic, property and medical compensation for individuals and businesses who filed a class action suit. As of Friday, more than 160,000 claims have been submitted under the Deepwater Horizon Economic and Property Damages Settlement, according to the settlement website, and a total of $1.87 billion of payments had been made on 27,488 claims. The source of dispute is about the calculation of business economic losses, for which $743 million has been paid out on 4,461 claims, according to the website. BP initially estimated the overall settlement bill at $7.8 billion, but the total is uncapped, and dependent on decisions made by Patrick Juneau, a Louisiana lawyer who administers the payments under complex rules set out by the agreement. "BP believes today's proceedings and the related filings were necessary steps on the way to appellate review," the company said in a statement on Friday, confirming it had filed a notice of appeal with the Fifth Circuit Court of Appeals - the next step in the federal judicial hierarchy. BP said it would consider how to proceed based on Barbier's latest ruling, but reiterated that Juneau's interpretation of the settlement produced "unjustified windfall payments" for "non-existent, artificially calculated" losses. Barbier told BP that it should take the issue up with the appeals court and then ask him to stay his original decision to uphold the payouts process on March 5. Barbier is also presiding over a trial to determine blame and overall damages for the disaster at the Macondo well, and that trial enters its seventh week on Monday. The accident killed 11 people and triggered the worst offshore oil spill in U.S. history. BP has estimated it will spend at least $42 billion to cover clean-up, fines and other liabilities, and has sold off assets to cover its costs. In an affidavit this week, Juneau explained the workings of the claims administration, which started operating last June following the April 2012 settlement. Over the summer, his team of experts and accounting firms ran blind tests of real claims and tweaked the process after suggestions from BP, Juneau said. Juneau added that he himself had raised the possibility of people being compensated even if their losses were not spill related, and BP's lawyers responded to him that those people were entitled to full recovery. After a fairness hearing in November, Barbier granted final approval of the process the following month. Juneau noted there was already an internal appeals process set out in the agreement for any party which disagreed with the program's calculations, involving an independent panel of court-appointed neutrals. On top of the plaintiffs' claims, there are also civil claims under the Clean Water Act covered by the New Orleans trial that could add as much as $17.5 billion to the total bill. Billions more could be piled on in economic damage claims from Gulf Coast states, while a third set of claims, for natural resource damage, have not yet been filed. The overall civil trial heard by Barbier is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179. (Reporting by Kathy Finn in New Orleans; Writing by Braden Reddall ; Editing by Gary Hill and David Gregorio )

Discouraged job seekers behind shrinking labor force. The number of working-age Americans counted as part of the labor force -- either with a job or looking for one -- tumbled by 496,000 in March, the biggest fall since December 2009, the Labor Department said on Friday. That pushed the so-called workforce participation rate to a 34-year low of 63.3 percent. March marked the second month in a row that the participation rate declined -- 626,000 people have dropped from the work force since January. Friday's report showed a decline in the number of discouraged job seekers last month after a pop in February, which at first glance might suggest the drop in the workforce was mainly because of shifting demographics. But a closer look at the underlying numbers raises questions about the notion that retiring baby boomers were the driving force behind the shrinking workforce. "You have to think that it's a large part demographics, but demographics are not really going to have such a big effect on month-to-month changes," said Keith Hall, senior research fellow at George Mason University's Mercatus Center. Of the nearly 500,000 people dropping out, just 118,000 were aged 55 and older, meaning more than three-quarters of the increase came from below-retirement-age adults. Also, the number of people 65 and older counted as part of the workforce actually rose by 27,000, which followed a 72,000 increase in February. Hall said the sluggish economy was forcing some older Americans to continue working to rebuild retirement nest-eggs that were shattered during the 2007-09 recession. Indeed, the participation rate for Americans between 55 and 64 years old held steady at a relatively high 65 percent. On the other hand, participation by the 25-29 age group was the lowest since record-keeping started in 1982. "People are just giving up the search for work. A lot of them would like to work and they aren't, that is a serious sickness in the economy," said Peter McHenry, assistant economics professor at the College of William & Mary in Williamsburg, Virginia. The drop in participation helped to lower the unemployment rate by a tenth of a percentage point to 7.6 percent. If the workforce had not contracted, the jobless rate would have risen two-tenths of a percentage point to 7.9 percent in March. LONG GRIND Since the recession ended, the economy has struggled to grow at a more than 2 percent pace. Economists say growth of more than 2.5 percent is needed over a sustained period to generate the number of jobs sufficient to reduce unemployment. In March, the economy added an anemic 88,000 jobs, the fewest in nine months. Some economists said the shrinking workforce was also likely the result of people falling off state unemployment benefit rolls. Jobless aid recipients are required to be actively looking for work. "When that incentive is no longer available, they withdraw," said Patrick O'Keefe, head of economic research at CohnReznick in Roseland, New Jersey. "The persistently high ratio of job seekers to job openings is such that discouragement is high." Falling participation, especially among young Americans, is troubling and could have long-lasting effects on the economy. "For the young who are getting out of school, studies show a lot of their earnings growth comes in the first 10 years after they get out of school," said Hall, a former Bureau of Labor Statistics Commissioner. "We're seeing a great deal of underemployed in youth and great disengagement, they are not participating in the labor market yet." Not only will this trend hurt productivity, but the resulting low wages will reduce consumption, holding back economic growth. It could also complicate things for the Federal Reserve, which has made the labor market the focus of monetary policy. Economists were concerned because the drop in the workforce came even though job growth had strengthened somewhat between July and February. Michael Feroli, an economist at JPMorgan in New York, said the workforce decline cast doubts on hopes that improving labor market conditions would pull discouraged workers back into the labor force. "The idea that labor force participation is structurally or institutionally impaired gains increasing credence with each passing jobs report," said Feroli. (Reporting by Lucia Mutikani; Editing by Leslie Adler)

U.S. visa program for skilled workers hits limit. The H-1B program has not reached its base cap of 65,000 so quickly since early 2008, before the economic crisis hit. That was the last time a lottery was used, according to USCIS. A separate H-1B allocation for masters and PhD graduates from U.S. universities has also hit its quota of 20,000 visas, USCIS said. After Friday, the USCIS will no longer accept applications subject to quotas. The H-1B is a nonimmigrant visa in the United States that allows U.S. employers to temporarily employ foreign workers in specialty occupations. The duration of stay is three years, extendable to six years. The USCIS is allowed to authorize 65,000 visas this year under the H-1B program. The lottery will determine who gets those visas. U.S. companies, particularly in technology, say they need the visas to fill vacant positions. But some worker-advocacy groups counter that the companies are using the visa program to hire cheaper foreign labor. USCIS will bundle the applications received through Friday into two lotteries. The lottery for 20,000 advanced-degree holders will be held first, and then any of those applications not selected will be fed into the wider lottery for the 65,000 limit. The agency said it could not yet specify a date for the lotteries due to the large number of applications received. While the official quota is 65,000, the actual number of people who enter the United States on H-1Bs is far greater because workers at universities and some other workplaces do not count toward the limit. Last year, the government issued 129,000 H-1B visas. U.S. Congress is currently working on immigration reform legislation. Among the proposals is a revamp of the H-1B program that could raise the quota based on demand and eliminate the lottery. (Reporting by Sarah McBride in Washington; editing by Matthew Lewis )

HP shakeup points to more "shareholder friendly" board. The stepping-down of Hewlett-Packard Co Chairman Ray Lane and appointment of activist investor Ralph Whitworth as his interim replacement has raised hopes for a more "shareholder friendly" board at the flailing PC maker. But investors aren't buying it just yet, and HP shares fell more than 2 percent in morning trading on Friday. Wells Fargo analyst Maynard Um said the shakeup at HP, which follows a series of missteps including the messy acquisition of UK software firm Autonomy, could result in longer-term "shareholder friendly" actions "potentially from a capital allocation perspective." But he said that while he now had more comfort about HP's ability to fix its foundation, the company needed new products and initiatives to offset a general downturn in the personal computer market. And any changes are likely to take time to formulate and materialize, Um said. Apart from a new chairman or chairwoman, investors are waiting to see the final composition of the board. Two directors of the No.1 PC maker also stepped down on Thursday. "The appointment of Ralph Whitworth to the chairman role, albeit temporarily, points a more fiscally conservative and shareholder friendly board as the debt burden ebbs," Credit Suisse analysts said in a research note. Analysts held fire on their ratings and price targets on the stock, which has risen 90 percent since it hit a 10-year low in November when HP said it would write down $9 billion in assets related to the Autonomy deal. The S&P 500 index has risen 12 percent in the same period. Lane, who remains a director, joins the list of prominent casualties of the $11 billion Autonomy deal, for which the company has been criticized for failing to conduct proper due diligence. But HP's board and executive leadership has been in tumult since the departure in 2010 of former CEO Mark Hurd over sexual harassment allegations -- which Hurd has denied -- and Leo Apotheker's brief stint at the helm, during which the company made several operational blunders. Whitworth, an HP director who runs activist hedge fund Relational Investors LLC, had told shareholders at the annual meeting in March to prepare for an "evolution" of the board. HP's stock was changing hands at $21.98 in early afternoon trading on the New York Stock Exchange, well below its intrinsic value of $39.51, according to Thomson Reuters StarMine data. The model measures a stock's current value when considering analysts' growth estimates for five years, and then modeling the typical growth trajectory over a longer period of time. Netflix Inc and Best Buy Co Inc are the only S&P 500 component stocks that have outperformed HP's 56 percent rise so far this year. According to StarMine, HP has a forward price-earnings ratio of 6.3, well below the median of 9.4 for the technology sector. However, in the past year, HP's shares have fallen 4 percent, while the S&P index has risen 11.5 percent. RBC Capital Markets analysts pointed to HP's "unraveling" fundamentals in maintaining their "sector-perform" rating, but said Whitworth's appointment was a positive step in corporate governance. "Going forward, HP will have to face headwinds in PCs and printing that are more secular and less macro in nature," the analysts said. "Furthermore, HP's impaired balance sheet will make it tougher for HP to invest in other avenues of growth." (Reporting by Sayantani Ghosh and Savio D'Souza in Bangalore; Editing by Ted Kerr )

Exclusive: Buyout firms eye Yankee Candle in $2 billion deal - sources. Bain Capital LLC, Advent International Corp, CVC Capital Partners Ltd CVC.UL, Clayton, Dubilier & Rice LLC and Ares Management LLC have made it through the first round of bidding and are set to meet with Yankee Candle's management over the next few weeks, the sources said. Madison Dearborn Partners LLC MDPRT.UL, another buyout firm, acquired Yankee Candle in 2006 for $1.6 billion. The candle manufacturer may be worth 10 times its earnings before interest, tax, depreciation and amortization (EBITDA) of around $200 million, the sources said, speaking on condition of anonymity because the matter is confidential. Madison Dearborn, Bain Capital, Advent, CVC and Ares declined to comment. Yankee Candle and CD&R did not respond to requests for comment. Founded in 1969, Yankee Candle sells items including scented candles, home fragrance products, car fresheners and candle accessories. The South Deerfield, Massachusetts-based company sells its candles in North America through 569 company-owned and operated retail stores, a wholesale network of about 27,800 store locations, as well as online and through its catalog. Fitch Ratings said in January that Yankee Candle's relatively flat financial performance had constrained its ability to lighten its heavy debt load. Yankee Candle generated net income of $56.3 million for fiscal 2012, up from $54.5 million in the prior year. It had long-term debt of $846 million and just $40 million in cash as of the end of 2012, according to earnings published on February 28. In its meetings with the candle maker's management, Bain Capital will come across an old acquaintance. Yankee Candle's chief executive, Harlan Kent, who last year appeared on the U.S. reality TV show 'Undercover Boss' as a Yankee Candle employee in disguise, began his career in the mid-1980s at Bain & Co, the consulting firm whose partners, including former U.S. presidential candidate Mitt Romney, founded private equity firm Bain Capital in 1984. Kent later worked for Bain Capital from 1997 to 2001 as senior vice president of global wholesale for umbrella maker Totes Isotoner Corp, which at the time was a Bain Capital portfolio company. He joined Yankee Candle in 2001 as senior vice president of the wholesale division and rose through the ranks to become CEO in 2009. Chicago-based Madison Dearborn is currently also preparing another portfolio company for a sale. Technology products retailer CDW Corp, taken private by Madison Dearborn and Providence Equity Partners Inc for $7.3 billion in 2007, registered with U.S. regulators on March 22 for an initial public offering. Madison Dearborn hired Barclays Capital ( BARC.L ) and Bank of America Merrill Lynch ( BAC.N ) to explore a sale of Yankee Candle, people familiar with the matter told Reuters last month. (Reporting by Greg Roumeliotis in Boston and Soyoung Kim and Olivia Oran in New York; editing by John Wallace)

HP chairman resigns after shareholder vote. Lane won 58.88 percent of shareholder votes, which was announced during the company's annual meeting last month. (Reporting by Poornima Gupta )

Wary French shoppers drag down Feb euro zone sales. The retail trade volume for the 17 countries using the euro fell 0.3 percent month-on-month, data from the EU statistics office Eurostat showed on Friday. Economists polled by Reuters had forecast a fall of 0.2 percent month on month. The statistics office also revised down January's retail trade volume to a monthly rise of only 0.9 percent from a previous 1.2 percent. The fall in retail trade volume shows weak consumer demand in the euro zone, which is trying to claw its way out of recession this year, against a slumping economy and three years of a debt crisis. Taken as a whole, the euro zone's economy is to contract 0.3 percent this year, the European Commission forecasts, but there is a growing divergence between the relatively healthy German economy and the rest of Europe. Trade at French shops dropped off significantly between January and February, with retail sales decreasing 2.2 percent. Some analysts have dubbed the country Europe's "sick man" as its economy struggles to eke out growth this year. Retail sales in Belgium, Slovenia, Slovakia and Finland also turned negative in February from growth in January. On an annual basis, euro zone sales fell in February by 1.4 percent, less than expectations of a fall of 1.8 percent. But Eurostat revised January's annual figure down to a deeper fall of 1.9 percent from a previous fall of 1.3 percent. Retail trade in countries undertaking austerity measures to shore up public finances was hit hard compared to last year, with Spain posting a 9.7 percent drop in volume, and Portugal showing a fall of 5.3 percent. For further details of Eurostat data click on: here (Reporting By Ethan Bilby)

Cyprus currency decree eases restrictions on bank transfers. Companies could transfer up to 10,000 euros ($13,000) per month from one bank account to another, and the limit for individuals was 2,000 euros, the finance ministry said in a statement. Other restrictions, including a 300 euro per day cash withdrawal limit from banks, and a vetting process for payments of more than 25,000 euros per day remained in place. Cyprus introduced currency controls in late March after heavy losses were slapped on uninsured bank depositors in its two largest banks in return for a 10 billion euro bailout from the International Monetary Fund and the European Union. ($1 = 0.7679 euros) (Reporting By Michele Kambas ; editing by Ron Askew)

Watchdog did not have timely Bank of Cyprus data on Greek debt: report. A report seen by Reuters said that the recent investigation was hampered by "unnecessary delays" in getting documentation from commercial Bank of Cyprus BOC.CY - one of the banks at the center of Cyprus's international bailout - and that some computers at the bank may have been wiped. A Bank of Cyprus (BOC) spokesman declined to comment, saying the bank had not been officially briefed on the report. The probe was conducted by professional services firm Alvarez & Marsal at the instigation of Cyprus's central bank. The company had a broad mandate to investigate the banking crisis affecting Cyprus, which eventually led to the island requiring a bailout from international lenders. The central bank declined to comment on the contents of the report but said in a statement: "The investigation will continue, and cover the purchase of Greek government bonds by the Popular Bank, including the expansion of Popular overseas. In parallel it will also examine the role and possible responsibilities of all concerned." In Bank of Cyprus's case the inquiry was focused on the circumstances leading to its heavy, loss-making exposure to Greek government bonds The report says BOC was not in breach of regulatory limits, despite a high concentration of Greek debt. But it said there was early regulatory concern about the bank's exposure to Greek government bonds (GGBs). "The (central bank) formally requested information regarding BOC's holdings of GGBs in March 2010, however, no written response was received from the BOC," the report said. It added that the central bank did not follow up on the lack of a written response in a timely way and the reason for that was unclear. There had been a verbal communication where BOC had "agreed not to buy further GGBs", even though a former central bank official reported BOC continued buying for another month after March 2010. The Alvarez & Marsal report also said it had found evidence of a "mass deletion of data" on one computer. "Based on an initial review of the data, our computer forensic technologists have found that the computers of two employees ... have had wiping software loaded which is not part of the standard software installations at the Bank of Cyprus," the report said. Of the report's five segments seen by Reuters, four are focused on the Bank of Cyprus and one on Popular Bank, known as Laiki, a bank in the process of being wound down. Further inquiries are planned into Popular, a preamble to the report said. BOND INCREASE An accumulated exposure of Cypriot banks to Greece via its bonds, which were restructured in late 2011, played a central role in the island's economic crisis, ultimately forcing it to accept a bailout last month. Bank of Cyprus's exposure to Greek government bonds was contained at below 500 million euros until 2009. In 2010, exposure ranged from 0.1 billion to 1.8 billion, and in late 2010 the company started repurchasing bonds, rapidly increasing the Greek portfolio to almost 2.4 billion in June 2010. The Alvarez & Marsal report said internal Bank of Cyprus documents did not "record a clear justification or rationale for the decision to accumulate" Greek bonds. "Based on emails and activity in 2009, it appears that BOC pursued an "absolute yield" strategy, purchasing GGBs to deliver net interest income, combined with a "relative value" strategy where they took advantage of selling opportunities to generate disposal gains, especially as reporting periods approached," the report said. Cyprus's central bank had initiated quarterly monitoring of GGBs from June 2009, but the frequency in data collection meant there was a lag, and regulators only had a partial picture of the bank's transactions. It also said that although it sought details of sovereign bond holdings, the central bank did not have any formal asset concentration monitoring in place. "As such, the BOC's high concentration of GGBs within its sovereign bond portfolio was not in breach of any regulatory limits," the report said. (Editing by Jeremy Gaunt and Alexander Smith )

MF Global bankruptcy exit plan primed for court hearing. The collapsed brokerage would repay the bulk of lender JPMorgan Chase & Co's ( JPM.N ) claim, and would pay unsecured creditors as much as 34 cents on the dollar under a plan slated to go before Judge Martin Glenn in the U.S. Bankruptcy Court in Manhattan. MF Global, led by former New Jersey Gov. Jon Corzine, filed for Chapter 11 in October 2011 after investors were spooked by its $6.3 billion exposure to European sovereign debt. It became a political firestorm when regulators discovered billions of dollars were missing from the accounts of MF's commodity trader customers. Corzine and other MF Global officials were ordered to appear in multiple Congressional hearings, and the FBI, Securities & Exchange Commission and at least one Congressional committee launched investigations. The brokerage was found to have misappropriated customer cash to try to plug liquidity gaps as it faltered. While no criminal charges have been filed against Corzine, regulators say his negligent conduct contributed to the firm's demise. In a report issued on Thursday, Louis Freeh, the former FBI director and trustee in charge of liquidating MF's estate, blamed "the risky business strategy engineered and executed by Corzine and other officers and their failure to improve the company's inadequate systems. The report came several months after a similar account from James Giddens, the trustee working to recover money for the broker-dealer's trader customers, which concluded that Corzine mismanaged the firm's growth. Corzine is facing civil lawsuits from Giddens and former customers. The plan going before Judge Glenn on Friday lays out how MF Global will pay back corporate creditors like lenders and bondholders. JPMorgan, agent on a $1.2 billion revolving credit facility, is a key player. Freeh has said that trader customers, while not technically creditors of the bankruptcy estate, will recover all their money. MINOR OBJECTIONS The plan was initially proposed by some of MF's largest unsecured creditors, led by hedge funds Silver Point Capital, Knighthead Capital and Cyrus Capital Partners. Freeh cooperated with the hedge funds on later drafts of the plan. While the plan is expected to be approved, it does face three objections, and Friday's hearing is a chance for the objectors to have their day in court. The Department of Justice, through its bankruptcy watchdog arm, the U.S. Trustee Program, said the plan impermissibly provides for the payment of legal fees for the creditors who first proposed it, and the release of certain third parties from legal claims. Preet Bharara, U.S. Attorney for the Southern District of New York, echoed the Trustee in balking at the releases. Sapere Wealth Management, a customer of MF Global's brokerage, has also filed an objection. Perhaps the biggest hurdle to approving the plan was resolved last month, when Freeh and JPMorgan cleared up a dispute over the value of intercompany claims within the bankrupt brokerage's estate. Under the deal, MF's parent entity will subordinate $275 million of its $1.887 billion claim against MF Global's finance unit below JPMorgan's $1.2 billion claim against the estate. The effect of the settlement is essentially to enhance JPMorgan's potential recovery to 76 cents for every dollar of claims, from 73 percent in an earlier version of the plan. But the settlement means less payout for unsecured creditors of MF Global's finance unit, who will see their maximum recovery dip to 34.4 cents on the dollar from 39 cents previously. Unsecured creditors of MF's parent entity have a maximum projected recovery of roughly 34 percent of claims. The case is In re MF Global Holdings Ltd, U.S. Bankruptcy Court, Southern District of New York, No. 11-15059. (Reporting by Nick Brown; Editing by Stephen Coates)

GM, Opel CEOs to meet German leader Merkel. With job losses looming at Opel's Bochum plant and against a background of European car sales in freefall, government spokesman Georg Streiter said Dan Akerson and Karl-Thomas Neumann will have a one-hour session with Merkel in Berlin on Thursday. Merkel is seeking a third term as chancellor in September. Her re-election in 2009 took place amid tortuous negotiations between GM and Berlin, which applied pressure to save Opel by selling a stake to supplier Magna. The deal eventually fell through, but only after the election, which meant it did not spoil Merkel's victory. Opel, GM's second-largest brand behind Chevrolet, has lost billions of euros in recent years as European car sales have plunged to near 20-year lows, despite repeated bouts of job cuts. Opel workers at Bochum last month rejected a restructuring deal agreed by union leaders and management which would have kept the plant open through the end of 2016 on significantly reduced staff numbers. The rejection could lead to the plant's closing at the end of next year. Streiter said the meeting with Merkel coincided with a meeting of the GM board in Germany and was at the U.S. automaker's request. Asked by reporters whether Opel would be the subject of Thursday's discussions, Streiter said he "could not rule it out". German Economy Minister Philipp Roesler will not attend as he will be on an official trip to Turkey, his ministry said. Management offered to keep the Bochum plant in western Germany open for another two years until the end of 2016 and then retain 1,200 of the more than 3,000 employees in other component and warehousing jobs. In exchange, workers would have had to agree to wage increases being delayed. (Reporting by Stephen Brown and Gernot Heller ; Editing by David Cowell)

Exclusive: SocGen mulls up to 700 job cuts - union sources. SocGen management met with unions on Wednesday to discuss the proposals, which have not yet been finalized, the sources said. The cuts, which will largely target back office staff in IT and compliance roles, will be partly offset by up to 100 new jobs created elsewhere, they added. "There will be 600 to 700 job cuts at SocGen's central offices," one of the sources said. "Nothing is finalized but the proposals are fairly advanced." SocGen employs 154,000 people worldwide, with 8,340 in its central administration department. A SocGen spokeswoman said the bank would seek to avoid forced layoffs and that it was "premature" to discuss reorganization plans when they had not been finalized. She added that SocGen would favor internal redeployment and voluntary departures where there was the need to cut staff. CGT union representative Michel Marchet said management had presented "several" different projects and that final numbers would not be revealed until the end of 2013. "There was a meeting, management presented a number of proposals," said Marchet. SocGen pledged in February to cut costs over the next three years with a reshuffled management team and promised to put in place a revamped structure, without giving numbers or targets. (Editing by James Regan )

AB InBev, Justice Department are near an agreement in beer deal. The Justice Department filed a lawsuit on January 31 aimed at stopping AB InBev, the world's largest brewer with some 200 brands, from buying the 50 percent of Grupo Modelo ( GMODELOC.MX ) it does not already own for $20.1 billion, saying the deal could mean higher U.S. beer prices. That battle may soon be over. "At this time, the parties have reached an agreement in principle on a resolution of this litigation," AB InBev and the Justice Department said in a joint filing to the court. When the deal was originally announced, AB InBev knew that it faced potential trouble in winning U.S. antitrust approval. So it said upfront that it would sell its 50 percent share of Modelo's U.S. distributor, Crown Imports, to Constellation Brands ( STZ.N ), the world's largest branded wine company. But the Justice Department's Antitrust Division argued that the company had such a large U.S. market share that it would have the ability to raise prices, and it sued to stop the deal. AB InBev sweetened its offer to the Justice Department in February, saying it was willing to sell Modelo's Piedras Negras brewery in Mexico near the U.S. border to Constellation for $2.9 billion and that it would grant Constellation perpetual rights for Corona and other Modelo brands in the United States. Analysts have said the main benefits of the proposed deal for AB InBev lie in Mexico, the world's fourth largest market in terms of profit generated, and in driving Corona sales outside the United States. The agreement in principle is "substantially in line" with the February proposal, Anheuser-Busch InBev said in a statement. "The parties request this additional stay so that they may finalize the details of a proposed consent judgment and related papers," the two sides said in the filing. "The parties expect this to be their final request to extend the stay." Despite a huge array of beers on store shelves, the U.S. beer market is dominated by two big players. AB InBev is the top seller, with 200 brands ranging from big names like Budweiser and Stella Artois to craft-style beers like Shock Top and Goose Island. The No. 2 player is MillerCoors, a joint venture between SABMiller Plc ( SAB.L ) and Molson Coors Brewing Co ( TAP.N ). "Any settlement would have to fully protect U.S. consumers by preserving the competition that Grupo Modelo currently provides, while giving a divestiture buyer the freedom and capability to compete vigorously going forward," Justice Department spokeswoman Gina Talamona said in an statement. If the two sides do finalize an agreement, it will need to be approved by the court. The proposed transaction also must be approved by Mexican regulators. AB InBev, formed in 2008 when InBev bought Anheuser Busch, was the top U.S. brewer with 47 percent of the U.S. beer market going into the Modelo deal. The deal has a huge upside for New York-based Constellation Brands, which makes Robert Mondavi and Ravenswood wines. It also sells spirits including Black Velvet Canadian Whisky and Svedka vodka. The revised deal would make Constellation the third largest U.S. beer producer. As part of its effort to sweeten the deal, AB InBev and Constellation agreed in February to a three-year transition period, during which Constellation would invest $400 million to expand Piedras Negras's capacity to enable it to supply 100 percent of U.S. needs, up from 60 percent today. AB InBev would supply Constellation with beer, cans and other assistance over this period. Constellation would have the option to extend the beer supply period by up to two more years. The case was filed in the U.S. District Court for the District of Columbia. It is United States of America v. Anheuser-Busch InBev and Grupo Modelo. The case is No. 13-cv-00127. (Reporting by Diane Bartz; editing by Ros Krasny and Leslie Adler)

U.S. trade deficit narrows in February as crude oil imports drop. The deficit narrowed to $43.0 billion, from an unrevised $44.5 billion in January. The consensus estimate of Wall Street analysts surveyed before the report was for the trade gap to widen slightly to $44.6 billion. The lower-than-expected deficit could prompt analysts to raise their estimates of first-quarter U.S. economic growth. The United States imported 205 million barrels of crude in February, down sharply from 261 million the previous month. The 17-year low came as monthly crude oil import prices rose nearly $2 a barrel from January to $95.96. Higher imports of autos, consumer goods, capital goods and food offset the reduced imports of oil and other industrial supplies and material, leaving overall imports unchanged from January at $228.9 billion. U.S. imports from China fell in February to their lowest level in nearly a year. The bilateral U.S. trade gap with China narrowed to $23.4 billion, also the lowest since March 2012. Overall U.S. exports grew 0.8 percent in February to $186.0 billion, just shy of the record level. Increased exports of industrial supplies and materials, other goods and autos were partly offset by lower exports of capital goods, consumer goods and food. (Reporting by Doug Palmer )

U.S. to press Europe on rebalancing economic demand: official. "What is very clear is that overall we're seeing very weak demand in Europe and rising levels of unemployment," a senior U.S. Treasury official said on a call briefing reporters about the trip. "There is clearly some capacity for demand rebalancing in the euro area. ... Of course there is greater room for the surplus countries to make a contribution." Lew will go to France, Belgium and Germany on his first official visit as treasury secretary, meeting with top European officials, finance ministers and the head of the European Central bank to discuss the recent slowdown in European growth and prospects for boosting it. The euro zone crisis flared up again recently after a bailout of Cyprus' banks hit depositors for the first time since the crisis started, raising fears of contagion and possible bank runs. Germany is one of the European countries that has a trade surplus, and some officials have pressed it to contribute more to consumption in order to boost overall growth in the euro zone. So far, 'periphery' countries like Portugal, Spain and Ireland have borne the brunt of fiscal adjustment by cutting back on demand for imports, the U.S. official said. During his trip, Lew will also discuss a planned free trade agreement between the United States and the 27-nation European Union. The White House in March notified Congress of its plans to formally begin the talks. The official also said the pace of job growth in the United States is not as fast as would be desired, and "blunt" government spending cuts could hurt the economy further. American employers hired at the slowest pace in nine months in March, data showed on Friday, a sign that Washington's austerity drive could be stealing momentum from the economy. (Reporting by Anna Yukhananov and Lucia Mutikani ; Editing by Leslie Adler and Andrew Hay)

Boeing completes 787 Dreamliner test flight for battery fix. The flight lasted about 1 hour and 50 minutes, landing at 12:28 pm Pacific Time (1928 GMT), according to Boeing. Data from the flight, which had Federal Aviation Administration officials aboard, will be submitted to the FAA, which will decide whether to approve the plane for flight. The 787 was grounded by regulators in January after batteries overheated on two planes. (Reporting by Alwyn Scott ; Editing by Gary Hill )

GM and Opel CEOs to meet German leader Merkel on Thursday. Akerson and Opel's chief executive Karl-Thomas Neumann will visit Merkel in Berlin on Thursday at 3 p.m. (10 a.m. ET) for an hour, said government spokesman Georg Streiter, adding that the meeting coincided with a meeting of the GM board in Germany. Last month employees at Opel's Bochum plant in western Germany rejected a restructuring deal agreed by union leaders and management, which would have kept the plant open through the end of 2016 on significantly reduced staff numbers. This could lead to the plant's closing at the end of next year. (Reporting by Stephen Brown ; Editing by Noah Barkin )

Germany says confident France will meet deficit obligations. "There are rules in the EU that apply for all. It's mostly down to the EU Commission to evaluate how to proceed further. Then the members of the EU council will look at it," said Martin Kotthaus, spokesman for Germany's finance ministry. "We have full confidence that France will fulfill its treaty obligations." France has acknowledged it will miss a 2013 goal of bringing its deficit down to 3 percent of output and wants its EU partners - notably Germany, the euro zone's largest economy - to give it another year to meet the target. (Reporting by Stephen Brown and Annika Breidthardt )

Boeing finishes 787 testing, focus shifts to regulators. Friday's test flight concludes testing after little more than three weeks, and moves the Dreamliner closer to resuming passenger flights, restarting jet deliveries, and stemming millions of dollars in losses that have piled up at airlines and Boeing since the jet was grounded more than two months ago. The end of testing also turns attention from Boeing Co to regulators in the United States, Japan and Europe, who must decide whether the fix for the high-tech plane's lithium-ion batteries is safe. Amid gusty winds, a LOT Polish airline plane rose from a runway near the Boeing factory just north of Seattle and soared out along the Pacific Coast, covering 755 miles in just under two hours before touching down at 12:28 pm Pacific Time (1928 GMT). The jet, carrying test equipment and Federal Aviation Administration officials, flew a similar route to a test run March 25. Boeing pronounced the flight "straightforward" and "uneventful" after the jet returned to earth safely. "Boeing will now gather and analyze the data and submit the required materials to the FAA ... in coming days," the company said in a statement. "Once we deliver the materials we stand ready to reply to additional requests and continue in dialog with the FAA to ensure we have met all of their expectations." Industry officials and airlines that operate the fuel-efficient plane have said they expect it could be flying again as early as April or May. Boeing has said it should happen in weeks, not months. Attention now shifts to politicians and regulators as aviation agencies weigh the competing demands of ensuring safety while not letting the costly grounding drag on too long. U.S. Transportation Secretary Ray LaHood, who oversees the FAA, voiced the competing views Friday, telling reporters both that Boeing has a "good plan" to fix the battery and that he wants to ensure the Dreamliner is safe before allowing the planes back in the air. "They're doing the tests now, and we've agreed with the tests that they're doing," he said before Boeing's final test flight took off. "When they complete the tests, they'll give us the information and we'll make a decision." An FAA spokesperson has said the agency has been closely involved with the testing process "so data review may not take long." However, she added that despite Boeing's "aggressive" testing schedule, "the FAA will work at its own pace." Meanwhile, it remains unknown what caused two batteries to overheat on separate jets in January. The U.S. National Transportation Safety Board, which is investigating the battery that caught fire on a parked plane in Boston, will hold two public meetings this month to gather more information about lithium-battery technology and the assumptions Boeing and the FAA made in certifying the original battery system. After the two battery failures, Boeing put more insulation in the battery, encased the battery in a steel box, changed the circuitry of the battery charger and added a titanium venting tube to expel heat and fumes outside the plane. The company said its fix addresses more than 80 potential causes and is thus more robust than if a single cause had been pinpointed. It also noted that media reports have exaggerated the risk from the battery, which is not generally used for flight-critical systems on the plane, but instead helps supply power on the ground. "There's a very good chance that this works and gets accepted," said Richard Aboulafia, an aerospace analyst at the Teal Group in Virginia. "There's also a chance that it gets derailed for technical or political reasons and I'm not confident Boeing's got a backup plan. There's probably a bigger risk that politics derails it." In addition to the FAA, Japan's Civil Aviation Bureau and the European Aviation Safety Agency must also approve the fix. Both are expected to follow the FAA's lead and certify it around the same time. CAB official Shigeru Takano said on Friday that he cannot predict how long it would take for the authorities to reach a decision. Boeing would then submit a "service bulletin" with detailed information about the fix, which the FAA would need to approve for distribution to airlines. Then the planes would be fixed and airlines would decide when to put them back into service. Each fix is supposed to take three days, and Boeing has already been assembling kits and teams to retrofit the 50 jets that are now owned by airlines, said Loren Thompson, a defense consultant and chief operating officer at the Lexington Institute think tank. Japan's All Nippon Airways and Japan Airlines are the biggest of the Dreamliner's eight customers. ANA, the launch customer, will be the first to have its jets fixed. United Airlines is the only U.S. operator so far. Despite the mounting cost, which is estimated at more than $500 million, Boeing is likely to weather the crisis without significant damage to its earnings or the long-term profitability of the plane. The Dreamliner is designed for 50 years of production, and Boeing's accounting for its initial production years includes more than $120 billion in costs. On that scale, expenses from the grounding are "probably unobservable or not material," said Carter Copeland, an analyst at Barclays in New York. "Very few people are even talking about it." Boeing's stock has rallied through the crisis, rising 16 percent since regulators grounded the fleet on January 16. It closed up 1.4 percent at $86.17 on the New York Stock Exchange on Friday. Regulators may restrict the plane from making long trips over water until the battery system is proven in flight, which would hurt airline operations. But that would be temporary. But Aboulafia doubted that the Dreamliner, which offers not only greater fuel savings to airlines but better cabin pressure, humidity and creature comforts to passengers, would suffer in the public eye from the battery problems. "There's absolutely no evidence of any lasting effect in terms of public perception," he said. (Reporting by Alwyn Scott, Tim Hepher in Paris, Yoko Kubota in Tokyo and Bill Rigby in Seattle; Editing by Richard Chang )

Stocks, dollar fall on weak U.S. jobs data. Brent crude oil fell to an eight-month low as the bleak U.S. jobs data dimmed the outlook for fuel demand in the world's largest oil consumer. U.S. employers hired at the slowest pace in nine months in March, adding just 88,000 nonfarm jobs, the Labor Department said, below an expected 200,000. The jobless rate ticked a tenth of a point lower to 7.6 percent, but the drop was largely due to people dropping out of the work force. "The report will fuel concerns about another spring swoon for the economy, the adverse impact of Congressional dysfunction, and more generally, the weak underlying dynamism of the economy," said Mohamed El-Erian, co-chief investment officer at Pacific Investment Management Company. The report followed a string of disappointing data this week on activity in the U.S. manufacturing and services sectors and on private-sector hiring, raising concern the recent rally in equities has outrun economic fundamentals. Japanese shares climbed to near a five-year high overnight, with the market in Tokyo closing before the U.S. jobs data was announced, a day after the Bank of Japan took bold monetary easing measures to fight deflation. Tokyo's Nikkei stock average .N225 jumped 4.7 percent, topping 13,000 points for the first time since August 2008. The yen sank to its weakest level in more than 3-1/2 years against the dollar, and benchmark 10-year Japanese government bond yields fell to a record low of 0.315 percent. The yen, down 3.5 percent this week against the dollar, posted its worst week since December 2009. Against the euro, the yen saw its largest weekly loss since November 2008, down about 5 percent. The MSCI world stocks index .MIWD00000PUS slipped 0.3 percent on the day to 355.36 points. U.S. stocks ended their worst week this year with losses on Friday after the jobs data undermined confidence in the economy and first-quarter earnings. The U.S. quarterly, corporate earnings season will start up next week. The Dow Jones industrial average .DJI dropped 40.86 points, or 0.28 percent, to close at 14,565.25. The Standard & Poor's 500 Index .SPX dropped 6.70 points, or 0.43 percent, to end at 1,553.28. The Nasdaq Composite Index .IXIC dropped 21.12 points, or 0.66 percent, to 3,203.86. For the week, the Dow fell 0.1 percent, the S&P lost 1 percent and, the Nasdaq dropped 1.9 percent. European shares .FTEU3 tumbled 1.5 percent, the biggest daily fall of the year, to close at 1,162.21 points. BONDS RALLY The dollar .DXY fell 0.2 percent against a basket of major currencies to 82.497, on expectations the Federal Reserve will continue its bond-buying program, known as quantitative easing. The euro rose 0.6 percent to $1.3004. "The market is assured that the Fed will not be taking its foot off the QE gas pedal anytime soon," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York. "This number is seeing follow-through in dollar weakness, and I expect that to continue against all countries who are not embarking on QE of their own." The dollar was last up 1.3 percent at 97.57 yen, having risen to 97.83, the strongest since June 2009. The euro rallied 1.8 percent to 126.85 yen. U.S. Treasuries rallied and yields fell to their lowest levels of the year. Weaker global equity markets, the Bank of Japan's monetary stimulus program, and escalating tension in the Korean peninsula also encouraged investors to buy bonds. The benchmark 10-year Treasury note was 17/32 higher after the report, driving its yield down to 1.706 percent. The price of the 30-year Treasury bond rose 2-22/32, pushing its yield down to 2.858 percent from 2.99 percent late on Thursday. German Bund futures extended gains to hit their highest level since June 2012 at 146.54, up 58 ticks on the day. Brent crude fell $2.22 to settle at $104.12 a barrel. U.S. crude dropped 56 cents to settle at $92.70. Spot gold rose to $1,578 an ounce from $1,552.71. (Additional reporting by Ryan Vlastelica , Gertrude Chavez-Dreyfuss and Ellen Freilich ; Editing by Leslie Adler)

Exclusive: Former News Corp President Chernin bids $500 million for Hulu. The website, jointly controlled by News Corp and Walt Disney Co, reached out to potential buyers in March after initially contemplating a deal in which one would buy out the other. It is not clear whether that transaction is still being contemplated. Chernin, a former Hulu board member who now runs a media holding company, is among those interested, the sources said on condition of anonymity because the bidding is not public. It is not known if other bidders have come forward. Chernin left News Corp in 2009 to assemble The Chernin Group, whose holdings span film and TV production and owns stakes in high-tech companies, including online radio service Pandora Media Inc. Providence Equity Partners invested $200 million in The Chernin Group in April 2012. The private equity firm sold its 10 percent stake in Hulu in October for $200 million, valuing the streaming service at $2 billion. Charles Sipkins, Chernin's spokesman, would not comment. Hulu spokeswoman Elisa Schreiber and News Corp's Dan Berger also had no comment. Disney declined to comment. Hulu's owners have for years pondered the direction of a service that now has more than 3 million subscribers for its premium offering and generated revenue of about $700 million last year. A third owner, NBC parent Comcast Corp, gave up corporate control as a condition of buying NBC Universal. The owners have shopped Hulu before, rejecting bids in 2011. The company also considered an initial public offering in 2010. (Editing by Edwin Chan and Andre Grenon )

Labor "scarring" reason for more bond buying: Fed official. As Boston Fed President Eric Rosengren took to the podium to give a speech on the pain caused by high rates of unemployment, fresh data showed employers added a very disappointing 88,000 jobs last month, the slowest hiring pace since last summer. The U.S. unemployment rate ticked down to 7.6 percent from 7.7 percent in the previous month, as more people gave up the search for work. Rosengren, a dovish voter on the Fed's monetary policy committee this year, highlighted the difficulties that less-educated Americans face in the search for work in the wake of recession. "Spells of unemployment can have a lasting impact long after the economy recovers," Rosengren said in prepared remarks to an early-childhood forum in Boston. "If spells of unemployment have a persistent impact on income, wealth and home ownership, then a more aggressive response to persistently high unemployment rates is warranted." Frustrated with the slow and erratic economic recovery, the Fed has tied its $85 billion in monthly asset purchases to a substantial improvement in the labor market outlook, and has said it will keep interest rates near zero until unemployment drops to 6.5 percent or so. In recent weeks, some Fed policymakers have said they were looking for more than 200,000 new jobs per month consistently for them to feel comfortable the labor market is healing and the economy will be able to avoid a mid-year pullback. "More rapid economic growth is likely to not only reduce the unemployment rate, but also reduce some of the collateral damage the economy may otherwise face from the spells of long-duration unemployment," Rosengren added. "Continued accommodative policy, such as continuing our asset purchase program through this year, is an appropriate response to labor market scarring," he said. The purchases of Treasury and mortgage bonds are meant to spur investment, hiring and broader economic growth. U.S. joblessness has edged lower since it soared as high as 10 percent at the tail end of the 2007-2009 recession, which was the worst in decades. In March, the data showed the labor market participation rate hit its lowest level since 1979. (Reporting by Jonathan Spicer; Editing by Chizu Nomiyama and Jeffrey Benkoe)

Exclusive: Disney to begin layoffs in studio, consumer products - sources. The studio job cuts will center on the marketing and home video units and include a small number from the animation wing, said the sources, who spoke on condition of anonymity because the plans had not been made public. It is unknown how many jobs will be lost at either division. Staff reductions at the consumer products unit will largely result from attrition, another person said. On Wednesday, Disney began layoffs at the 30-year-old LucasArts games studio it inherited with the acquisition of George Lucas' film company last year, as it focuses on licensing its "Star Wars" brand externally. A Disney spokeswoman had no comment. Disney, headquartered in Burbank, California, started an internal cost-cutting review late last year to identify cutbacks in jobs it no longer needs because of improvements in technology, one of the people said. It is also looking at redundant operations that could be eliminated following a string of major acquisitions over the past few years, said the person. Disney cut about 200 people at its Disney Interactive video game last year, as the company moved away from console games to focus on online and mobile entertainment. An additional 100 staffers have been laid off in two cuts since. The company also made cuts at the publishing unit last year when Disney moved its operations to Burbank from New York as part of a restructuring of its consumer products unit. (Reporting by Ronald Grover; Editing by Edwin Chan , Ryan Woo and Peter Cooney )

Analysis: Big inflows into bonds undercut the "Great Rotation". Even as the fixed-income sector grapples with a rare negative start to the year, many of the biggest and widely followed bond firms are still attracting new cash to their flagship funds. And it is not expected to stop any time soon. "I think the demand is there because many investors, especially mom-and-pop investors, still want income and, equally important, have been burned twice on equities," said Jeffery Elswick, director of fixed income at Frost Investment Advisors, LLC, which manages over $9 billion. "They lost so much money, like in the double-digits, during the tech bust (2000-2002) and credit crisis in 2008 - and don't want to go through that again," he said. The Federal Reserve's massive bond-buying program, $85 billion a month of U.S. Treasury debt and residential mortgage bonds, has driven bond prices higher and pinned their yields, which move in the opposite direction, near record lows. That has led many market experts to warn there was a much greater risk of significant losses - as yields eventually return to more normal levels - than any further gains in the bond market. They therefore predicted 2013 would be the year of a large-scale investment shift market many dubbed "The Great Rotation" - a tilting of pension and insurance funds' long-term asset mix back towards equities from heavy weighting in bonds. Yet big names like Pacific Investment Management Co (PIMCO), DoubleLine, Loomis Sayles and TCW have seen their main bond funds take in an aggregate total of roughly $5 billion during January and February. Vanguard's indexed Total Bond Market portfolios have received over $5.6 billion for the same period, according to the latest data provided by Morningstar. More broadly, while U.S. funds that invest in stocks have gained $78.88 billion in new cash so far this year amid the U.S. stock market's run-up, taxable bond mutual funds have garnered roughly the same - $76.41 billion, according to data from Thomson Reuters' Lipper service. These inflows belie the notion that "The Great Rotation" has taken hold this year. "The idea of a 'Great Rotation' into stocks from bonds appears to be a somewhat naive justification of the bullish case for equities for those who have not grasped the magnitude of the Federal Reserve's impact on the market," said Bonnie Baha, head of Global Developed Credit at DoubleLine Capital LP, which manages more than $56 billion in Los Angeles. Too much emphasis has been placed on the widespread prediction that record-low bond yields will prompt investors to rotate out of bonds and into stocks during 2013, Baha said. Equities have gained strongly this year on increasing confidence in the U.S. economy and financial markets, while bond prices are being supported by U.S. central bank purchases. The reallocation to equities has apparently come at the expense of money market funds, noted Larry Jeddeloh, chief financial officer of the TIS Group, which produces the Market Intelligence Report. Those funds have suffered outflows of $82.5 billion so far this year. Indeed, the Fed's program to suppress interest rates has triggered a massive yield hunt among investors. That has translated into strong demand for investment-grade corporate debt and high-yield bonds, also called junk bonds because they carry below-investment-grade ratings from Standard & Poor's and Moody's Investors Service. "I think there's a tug of war going on," DoubleLine's Baha said. "This is likely to be a low volatility year for bonds with all the Fed bond buying. I don't think you will see a wholesale exit from diversified bond portfolios." The yield on the benchmark 10-year Treasury note, which popped above 2 percent in February, had declined to 1.76 percent by the close on Thursday. That is despite relatively strong economic data, a recovering housing market and gains in U.S. stocks that have taken indexes to record highs. Geopolitical risks have also led investors to their favorite safe haven of Treasuries. On Wednesday, Treasuries gained on news the Pentagon was sending a missile defense system to Guam in the coming weeks and remarks by Defense Secretary Chuck Hagel that North Korea posed a "real and clear" danger. WHAT BOND VOYAGE? Bonds did suffer a quarterly loss to start the year. The Barclays U.S. Aggregate Bond Index registered a total return of negative 0.12 percent in the first quarter, only its second down quarter since the financial crisis, though most big-name bond funds turned in a slightly positive total return. TCW funds easily surpassed the benchmark Barclays Aggregate, posting a first-quarter return of 1.12 percent, bringing its 12-month return to 10.37 percent. That performance stems from its bet on so-called non-agency mortgages, or residential mortgage bonds not guaranteed by the likes of Fannie Mae or Freddie Mac. Those have gained thanks to the Fed's massive bond-buying purchases, which have helped support risk assets including non-agency mortgage-backed securities(MBS). And with the housing market recovering, managers like TCW correctly bet that there would be more profit and less risk in buying private-label MBS-backed debt. The fund's manager, Bryan Whalen, said he expects these bonds to offer loss-adjusted returns in the 7.5 percent to 9 percent range. Last year, TCW also began shifting into floating-rate assets that had been less in demand given the Fed's intention to keep its target interest rate low through mid-2015. For its part, the DoubleLine fund, which is also exceeding the index with a return of 1.27 percent during the first quarter, has used a combination of government-guaranteed securities, mainly agency MBS and some Treasuries, and credit securities, mainly private-label, residential mortgage-backed securities with some commercial MBS. DoubleLine's 12-month return is now 7.37 percent, as of the end of March. When corporate credit and equity prices have fallen, be it due to macro risks such as European debt crisis, heightened fears of economic weakness in the U.S., or worries over budget deficit issues, U.S. government-guaranteed issues such as agency MBS and Treasuries have rallied. Conversely, when credit prices rally because of growing confidence in the economy, non-agency MBS and commercial MBS participate in the gains. The fund's low duration and healthy yield also buffers the overall portfolio from swings or volatility in prevailing interest rates. The PIMCO Total Return Fund, run by PIMCO founder and co-chief investment officer Bill Gross, is also outperforming its benchmark. The fund has gained 0.60 percent so far this year, as of March 31, outperforming the Barclays Aggregate, and for the full year, the PIMCO portfolio's 12-month return of 7.92 percent is easily beating the one-year return of the Barclays index at 3.77 percent. Gross's Total Return Fund has been overweight in some credits such as non-U.S. developed markets and emerging markets. He has also shortened the fund's duration thereby reducing the portfolio's risk to rising interest rates. As of February 28, the fund's effective duration stood at 4.54 years, down from 4.77 years at the end of last year. Gross said on Twitter in March that five-year and shorter maturities will "do best based on continuing policy rate. (Reporting By Jennifer Ablan; Editing by Dan Burns and Leslie Gevirtz )

ECB's Coeure sees euro zone inflation straying off course. Euro zone inflation slipped in March for a third straight month to an annual rate of 1.7 percent, compared to the ECB's goal of close to, but not above, 2 percent. "We have a rate of inflation which looks set to move away from the ECB's 2 percent target over the next 18 months," Coeure told reporters at a breakfast event, adding that a drop in inflation was as worrying as a rise. "It is still fairly close to the 2 percent target but it is moving below that goal and this is something the board of governors is clearly following as we have a goal of 2 percent," Coeure said. Recent economic data is in line with the ECB's projections for the bloc this year and next, with "no bad surprises," Coeure added, saying this justified the bank's decision this week not to lower rates, despite worries about weak domestic demand. The ECB held rates at a record low 0.75 percent on Thursday, the highest level among the world's major central banks, but ECB chief Mario Draghi said the central bank stood ready to act to boost the stalled economy. Underlining the difficulties getting credit flowing in the bloc, Coeure said many banks were discouraged from granting new loans as their balance sheets remained weighed down with assets acquired before the financial crisis which had since lost value. Though the ECB has provided vast amounts of liquidity to banks, Coeure said the central bank did not have a role to play in mitigating the risks from banks' pre-crisis legacy assets. "Monetary policy cannot be the main tool used to try and resolve difficulties with credit flows. Monetary policy can contribute but it cannot completely resolve these problems," Coeure said. The ECB is worried its low rates are not reaching households and companies in the euro zone periphery, mainly because banks' funding costs in crisis-hit countries are higher than those in the core countries, pushing up loan costs. This affects small and medium-sized businesses in particular as they have few alternatives to bank funding. (Reporting by Leigh Thomas and Ingrid Melander ; Writing by Catherine Bremer )

Judge approves BofA $2.43 billion settlement over Merrill. The accord, among the largest investor settlements stemming from the recent global financial crisis, was approved by U.S. District Judge Kevin Castel in Manhattan. Castel called the settlement "fair, reasonable and adequate," and said it culminated an "extraordinarily hard-fought litigation." Bank of America had agreed to buy Merrill in an all-stock deal initially valued at $50 billion on September 15, 2008, the same day that Lehman Brothers Holdings Inc went bankrupt. But Merrill ended up losing $15.84 billion in that year's fourth quarter, even as it awarded $3.62 billion of bonuses to employees. Bank of America ultimately obtained a federal bailout, since repaid, to absorb Merrill. Shareholders including the State Teachers Retirement System of Ohio and the Teachers Retirement System of Texas said Merrill's mounting losses and bonus plans should have been disclosed before investors voted on the merger in December 2008. The accord with the second-largest U.S. bank was announced in September, and won preliminary court approval in December. "We are very proud of this result," Max Berger, a lawyer for the plaintiffs, said at the hearing. Bank of America denied the plaintiffs' allegations, but Chief Executive Brian Moynihan has said the settlement would remove uncertainty for the Charlotte, North Carolina-based bank. Daniel Kramer, a lawyer for the bank, declined to comment at the hearing. A spokeswoman, Jessica Oppenheim, did not immediately respond to requests for comment after the hearing. Since buying mortgage lender Countrywide Financial Corp in July 2008 and Merrill six months later, Bank of America has incurred more than $40 billion of extra costs for litigation, write downs and mortgage buybacks, analysts have said. The company still faces a variety of litigation over its mortgage operations, which have shrunk significantly in size, and over its underwriting of mortgage securities. Bank of America is among 17 banks and lenders facing lawsuits by the Federal Housing Finance Agency over losses suffered by Fannie Mae ( FNMA.OB ) and Freddie Mac ( FMCC.OB ) on mortgage securities. The FHFA has sued Bank of America over $57.5 billion of securities, more than any other bank, that Fannie Mae and Freddie Mac bought, and which were sponsored or underwritten by Bank of America, Countrywide or Merrill. Bank of America shares closed up 3 cents at $11.97 on the New York Stock Exchange on Friday. Castel also awarded three law firms representing the plaintiffs about $160.5 million, including $152.4 million in fees. "The lawyers did a very fine job of keeping their eye on the job," he said. The case is: In re: Bank of America Corp Securities, Derivative, and Employee Retirement Income Security Act (ERISA) Litigation, U.S. District Court, Southern District of New York, No. 09-md-02058. (Reporting by Bernard Vaughan; Additional reporting by Jonathan Stempel; Editing by Gary Hill , Dale Hudson and Leslie Adler)

Boeing has "good" 787 battery plan fix: official. LaHood said he wants to ensure the Dreamliner is safe before allowing the planes back in the air, and no decision had been made on commercial flights. Airlines that operate the plane expect it could be flying again as early as April or May. "They're doing the tests now, and we've agreed with the tests that they're doing. And when they complete the tests, they'll give us the information and we'll make a decision," LaHood said at the U.S. Export-Import Bank's annual conference in Washington. The statements came as Boeing scheduled a test flight for later Friday to test a remodeled lithium-ion battery system designed to prevent the overheating or fire that occurred on two jets in January, prompting regulators to ban all 50 of the jets in service from flying. The test flight will gather data for the Federal Aviation Administration to show the new battery system is safe and performs as designed. The flight is part of a series of tests to show whether measures Boeing has devised to fix the battery problems work as intended. A preparation flight on March 25 "went according to plan," Boeing said. It's still unknown what caused the two batteries to overheat, and the National Transportation Safety Board is investigating. Boeing came up with measures it says make the battery safe. It put more insulation in the battery, encased the battery in a steel box, changed the circuitry of the battery charger and added a titanium venting tube to expel heat and fumes outside the plane. Once Boeing completes its testing, the Federal Aviation Administration and other global regulators will review the test data and decide whether to certify the fix and return the plane to service. Airlines have been barred from using the plane since it was grounded in January, and Boeing has been barred from delivering 787s, though it continues to build the plane. The delay has been costing the company an estimated $50 million a week. (Reporting by Doug Palmer and Alwyn Scott ; writing by Ros Krasny ; Editing by Neil Stempleman and Andrew Hay)

Boeing sets final 787 Dreamliner test flight for Friday. Boeing said the flight is scheduled to depart around 11 a.m. PDT (2 p.m. ET) and last about two hours. The time is subject to change, it said. The flight would gather data for the Federal Aviation Administration to help show that a new battery system on the plane is safe from the risk of fire or overheating. (Reporting by Alwyn Scott ; Editing by Gerald E. McCormick)

Adelson testifies middleman "couldn't deliver" in Macau. Richard Suen alleges the Las Vegas company stiffed him on an agreed upon "success fee" for helping secure a permit for a hotel and casino in Macau, a Chinese special administrative territory that has become the world's most lucrative gambling mecca. "He couldn't deliver and he wanted to keep his fingers in the pie," the 79-year-old Adelson testified in a Las Vegas court. "Once he couldn't, he wanted to get his fee and offered other services," such as public relations and arranging financing, said Adelson. Adelson, who entered the courthouse on a motorized scooter and looked frail and unsteady as he walked to the witness stand with the aid of a cane, nearly caused a mistrial by presenting promotional brochures for his convention business that hadn't been cleared to be introduced into evidence. Adelson produced the brochures in court despite instructions from his legal team not to bring them, his lawyer Richard Sauber said. Adelson was using the brochures to show that Sands didn't need Suen's help in marketing. Sands has become one of the world's most profitable casino companies over the past decade, largely on the strength of its Macau operations. But the company faces allegations from Suen and from its former China CEO, Steve Jacobs, who has also filed a lawsuit against Las Vegas Sands for wrongful dismissal. Jacobs alleges that Adelson demanded he conduct "secret investigations" into the finances of Macau government officials in order to "exert leverage." Adelson has denied Jacobs's allegations. The company said in financial filings with the U.S. Securities and Exchange Commission that it "intends to defend this matter vigorously." Adelson's testimony on Thursday came on the second day of the retrial of the Suen case. In 2008, a jury in Nevada state court awarded Suen $43.8 million in damages, plus interest. But an appellate court overturned that verdict on the grounds that some of the evidence used was inadmissible. Suen's attorney, John O'Malley, estimated in opening arguments for the current case that the amount his client was owed had increased to $328 million, based on what he said was an agreement for Suen to receive $5 million plus 2 percent of Sands' net profits in Macau. In his opening argument, O'Malley detailed meetings he said Suen arranged for Adelson, including with one of China's then vice-premier Qian Qichen and with Beijing Mayor Liu Qi. The lawyer said Adelson offered help in defeating a House of Representatives resolution against awarding the 2008 Olympic Games to Beijing. But Adelson said this wasn't the case. "The idea that me, a kid from the slums, could help China, the largest country in the world, as if it had no lobbyists of its own, is ludicrous," Adelson said from the stand. The Chinese government did not respond to a request to comment on the 2008 Olympic Games. Sands has said that it won the Macau license without Suen's assistance. Adelson said Suen contacted him in 2000, before Macau said it would end its government monopoly over gaming. Adelson said he met Suen in the Peninsula Hotel in Macau and then in the meeting room at the Macau airport where the Hong Kong businessman introduced him to two Chinese businessmen. "Suen brought two guys, Liu or Chu, something like that," Adelson said. "I'm not very good at Chinese names. I'm not always good at English names." Adelson testified that after failing to deliver help in winning the license, Suen next offered to help Sands find financing and investors for the Macau casino. He also offered to arrange public relations and lobbying for the company, which Adelson said he declined. Sands has disclosed in regulatory filings that it received a subpoena from the SEC in 2011 related to its compliance with the Foreign Corrupt Practices Act (FCPA), and had been advised the U.S. Department of Justice was conducting a similar investigation. The results of an investigation by the Sands board after it received the subpoena found "likely violations of the books and records and internal controls provisions" of the FCPA, Sands said in a December 31 filing with the SEC. It also said at that time it had improved its practices. A spokesman at Las Vegas Sands could not be immediately reached for comment. Sands said in the filings that it believes the Justice Department subpoena may have been prompted by Jacobs' lawsuit, which was filed in 2010. Jacobs was present in the packed Vegas courthouse for Adelson's testimony on Thursday, but declined to comment on his case. (Additional reporting by Ronald Grover; Editing by Jonathan Weber, Martin Howell and Ryan Woo) (The story corrects 17th paragraph to say "before" instead of "after")

BizJet officers charged with bribing Latin American officials. The charges, unsealed on Friday, were filed in January of 2012 against four directors of BizJet International Sales & Support, a U.S.-based unit of Lufthansa that provides aircraft maintenance, after a joint probe by the DOJ and FBI. The men are accused of offering "hundreds of thousands of dollars" in bribes to Latin American military officials in violation of the Foreign Corrupt Practices Act, the DOJ said in a statement on Friday. The recipients of the bribes, to ensure aircraft maintenance contracts for BizJet, include officials at the Mexican Policia Federal Preventiva and the Estado De Roraima in Brazil, the DOJ said. The charges follow an $11.8 million penalty paid last year by BizJet stemming from the same alleged corrupt practice. Two of the men have already pleaded guilty, according to the DOJ. Paul DuBois, the company's former vice president of sales, admitted to one count each of violating and conspiring to violate the FCPA, while Former Vice President of Finance Neal Uhl pleaded guilty to conspiring to violate the FCPA. Both men were sentenced in federal court in Oklahoma on Friday to probation and eight months home detention. BizJet's former Chief Executive, Bernd Kowalewski, along with former Sales Manager Jald Jensen, were indicted on charges of violating and conspiring to violate the FCPA and laundering money. Both are believed to be abroad, the DOJ said. A spokeswoman for BizJet did not respond to a request for comment. A spokesperson for Lufthansa could not immediately be reached. FCPA investigations are fairly common among U.S. companies, but the DOJ has had some trouble making charges stick. Last year, the department moved to dismiss a case involving almost two dozen defendants in the arms industry after prosecutors were unable to convince two juries that what the defendants did was illegal. Another federal judge in California in December 2011 dismissed the conviction of power products company Lindsey Manufacturing based on what he said was prosecutorial misconduct. The BizJet charges reflect the department's "continued commitment to holding individuals accountable for violations of the FCPA," Mythili Raman, acting assistant attorney general, said in the DOJ's statement. Valerie Parlave, assistant director at the FBI's Washington field office, said the bureau is "committed to curbing corruption." "Business executives have a responsibility to act appropriately in order to maintain a fair and competitive international market," Parlave said in the statement. (Reporting by Nick Brown in New York. Editing by Andre Grenon)

Ex-Thomson Reuters employee sues over survey distribution. In the lawsuit, filed on Wednesday in Manhattan federal court, Mark Rosenblum said he was terminated after telling U.S. authorities that the Thomson Reuters/University of Michigan Surveys of Consumers was released at different times to different subscribers. "We believe the accusations from the complainant against Thomson Reuters to be unsubstantiated and without merit, and we will defend against them vigorously," a company spokesman said in a statement. Rosenblum said in his court papers that Thomson Reuters releases the monthly survey to so-called "ultra low-latency" subscribers at two seconds before 9:55 a.m. ET, to "desktop" subscribers at 9:55 a.m., and to the general public at 10 a.m. In the financial services industry, low latency is a reference to higher speed services often used by high-frequency traders. Rosenblum said in the court papers that last June 29, he told an unnamed FBI agent that he believed this "tiered release" violated federal securities laws, and that on the same day he told company executives that he had contacted federal investigators about the matter. In the lawsuit, Rosenblum said he was fired on August 3 from his job as a redistribution specialist, without severance, for engaging in protected whistleblowing activity under the 2010 Dodd-Frank law. He is seeking unspecified compensatory and punitive damages. Jesse Rose, a lawyer for Rosenblum, did not immediately respond to a request for comment. FBI spokesman Jim Margolin declined to comment. The case is Rosenblum v. Thomson Reuters (Markets) LLC, U.S. District Court, Southern District of New York, No. 13-02219.