by Rachael Granby and the Market Currents team

U.S. banks to pay oversight fee. Banks with more than $50B in total assets will have to start paying a fee to cover the costs of the Financial Stability Oversight Council and the Office of Financial Research, according to a rule proposed yesterday by the Treasury. Banks will face a flat rate collected twice a year; the Treasury hasn't yet specified the size of the fee.

Banks borrow more from ECB. Banks borrowed €17.307B from the ECB overnight, a very sharp jump from the €4.321B borrowed on Wednesday and the highest level since February. Banks deposited €445.683B, still near the €452.034B record set earlier this week.

Credit gets tighter. The Fed's survey of senior credit officers found a "broad, but moderate tightening of credit terms" to large market participants over the past quarter, particularly noting REITs, hedge funds, and non-financial corporations. Though not directly mentioning Europe, events there clearly provide an undertone to the cautious report.

Sarkozy takes aim at unemployment. France's Nicolas Sarkozy is using the holiday break to work on a plan aimed at arresting the country's sharp rise in unemployment. Taking his cue from Germany in 2009, Sarkozy's draft plan calls for companies to retain all staff even when business is weak and for employees to accept pay cuts in exchange. Officials are also considering opening a broader debate on work-time flexibility.

Greek data looks ugly. The latest data showed continued deterioration in Greek tax revenue, with income taxes collected through November coming in 9.3% less than last year, suggesting the budget deficit will balloon above 10% of GDP. The Finance Ministry has alerted all state organs not to spend a euro above their budgets and that they should not take for granted that even budgeted funds will show up in their bank accounts.

China manufacturing contracts. China’s manufacturing contracted for a second month in December, with HSBC's PMI coming in at 48.7 from 47.7 the month before. The weak manufacturing data adds pressure to officials to consider loosening monetary policy.

Verizon fee irks customers. Verizon (VZ) further angers customers by announcing it will start charging a $2 "convenience fee" for every payment made over the phone or online with credit cards. The company said the move is necessary to help pay for "single-bill payment options" but customers are less than pleased. The decision comes on the heels of a series of outages of Verizon's high-speed data network.

Goldman, Morgan face off on IPO. Goldman Sachs (GS) and Morgan Stanley (MS) appear to be the front-runners in the race to take the lead investment-banking role in Facebook's expected 2012 IPO. At stake is both bragging rights and hundreds of millions of dollars in potential fees.

Sumitomo Mitsui eyes opportunities. Japanese megabank Sumitomo Mitsui Financial Group (SMFG) plans to buy several hundred billion yen worth of assets being sold by European lenders seeking to raise capital to weather the region’s debt crisis. The bank is also considering buying an entire business unit, possibly a brokerage, from a European bank, taking advantage of expansion opportunities and a strong yen to buy operations abroad.

BofA is biggest loser. Heading into the last trading day of 2011, BofA (BAC) looks set to be the DJIA's biggest loser of the year. Down 59% YTD, the bank has been beset by mortgage losses, new regulations, lack of confidence in management and the broader economic slowdown. In comparison, the DJIA is +6.1% YTD while the KBW Bank Index is "only" -24%.

Countrywide back in the spotlight. One week after paying a fine to make allegations go away that it discriminated against minority homeowners, Bank of America's (BAC) Countrywide unit is ordered to face another lawsuit as a federal judge reverses a lower court ruling. The suit stems from a Hispanic couple that contends they were pressured to refinance their home on terms they could neither understand nor afford.

Liberty Mutual challenges Harleysville sale. Liberty Mutual has asked regulators to scrutinize the sale of Harleysville (HGIC) to a rival after its own bid for the company was rejected. The offer included a payout of $250M to its customers; HGIC instead agreed to a sale to Nationwide with no customer payout. Noteworthy: CEO Michael Browne's stock and options would be worth ~$27.9M in a sale to Nationwide vs. ~$13.9M in a Liberty deal.

AMR to leave the Big Board. The NYSE will delist shares of bankrupt American Airlines (AMR), suspending them from trading prior to the open on Jan. 5. Premarket: AMR -33.8% to $0.342 (6:30 ET).

Today's Markets:
In Asia, Japan +0.7% to 8455. Hong Kong +0.2% to 18434. China +1.2% to 2199. India -0.6% to 15455.
In Europe, at midday, London -0.5%. Paris +0.2%. Frankfurt +0.1%.
Futures at 7:00: Dow -0.02%. S&P +0.02%. Nasdaq +0.01%. Crude +0.25% to $99.90. Gold +2.1% to $1572.70.

Friday's economic calendar:
8:30 ISM New York Business Index
3:00 PM USDA Ag. Prices

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by Rachael Granby and the Market Currents team

Italian yields down slightly. Italy sold €2.5B of 10-year bonds at an average yield of 6.979%, down from recent highs but still an unsustainable level. The 10-year auction was slightly oversubscribed, with a bid-to-cover ratio of 1.357%. All told, Italy raised ~€7B today from bonds of varying maturities; the plan was to sell €5B-8.5B. Separately, the use of the ECB's overnight deposit facility declined marginally from Tuesday's record high, dipping to €437B from €452B.

Banks face new tax rules. Banks are bracing for new U.S. regulations aimed at reducing tax evasion, which could affect hundreds of billions of dollars worth of deposits in accounts across the globe. In response, some banks overseas are alerting customers their accounts will be closed, while U.S. banks are lobbying for changes to some of the proposals.

BP employees may face charges. U.S. prosecutors are reportedly preparing the first criminal charges against BP (BP) employees in connection to the Deepwater Horizon oil spill. Sources said the focus is on several engineers and at least one of their supervisors for possibly providing regulators with false information about drilling risks.

China updates FDI guidelines. China wants foreign investors to focus on hospitals, financial-leasing companies and sectors that bring new technology to the country, and to minimize investment in such traditional draws as automobile factories or petrochemicals. The 29-page list of investment guidelines was released today, and kicks in on Jan. 30.

Alibaba pushes for Yahoo deal. Alibaba.com (ALBIY.PK) has reportedly hired Washington lobbying firm Duberstein Group in its effort to strike a deal with Yahoo (YHOO). The move suggests Alibaba might be willing to make a bid for all of Yahoo if it doesn't succeed in its efforts to buy back Yahoo's Asian assets.

Oil to stay elevated. Analysts see oil prices staying above $100 a barrel in 2012, with the potential for an Iran disruption embedding a $10-$20 premium in prices. Also seen as contributing to the forecast for $100+ prices is the concerted effort of OPEC nations to keep prices elevated to help fund social assistance programs promised by governments in the Middle East and North Africa in response to the Arab Spring uprisings. WTI crude +0.2% to $99.55 (7:00 ET).

Alexion to buy Enobia. Alexion Pharmaceuticals (ALXN) agreed to buy privately-held biotech firm Enobia for $1.08B in cash, with $610M paid up front and the rest after various regulatory and sales milestones are hit. Enobia is focused on therapies treating patients with ultra-rare, life-threatening genetic disorders.

Japan, India create swap line. Japan and India agreed to a $15B currency swap line, after a previous $3B deal expired over the summer. The countries have good diplomatic relations, but share only a fraction of the trade that goes on between Japan and China.

Mosaic cuts production. Mosaic (MOS) will cut its quarterly finished phosphate production by up to 250,0000 tons, or ~10%, until the end of March as excess supply weighs on market prices. "The current spot prices in this market do not reflect our outlook for the business, nor do we think they are sustainable," CEO Jim Prokopanko said. In after-hours trading, MOS -1.9%.

Global M&A takes a hit. Global M&A fell to its lowest level in more than a year this quarter, down 16% from the previous quarter to $457.1B. A 2012 M&A recovery isn't looking good, as volatile stock markets, the eurozone's debt crisis and tightening credit markets are scaring cash-rich companies away from major purchases.

Easing repo market risk. At the request of the Fed, a bank industry task force is working on a plan to ease systemic risk in the repo funding market where traders have near-complete dependence on JPMorgan (JPM) and BNY Mellon (BK) as clearing banks. One solution is to add more banks, while another, favored by some at the Fed, is to let a government agency take over.

Chesapeake Midstream buys Appalachia Midstream. Chesapeake Midstream Partners (CHKM) agreed to acquire Appalachia Midstream Services, the wholly owned subsidiary of Chesapeake Midstream Development that holds its Marcellus Shale midstream assets, for $865M.

Today's Markets:
In Asia, Japan -0.3% to 8399. Hong Kong -0.7% to 18398. China +0.2% to 2174. India -1.2% to 15544.
In Europe, at midday, London +0.2%. Paris +0.2%. Frankfurt +0.4%.
Futures at 7:00: Dow +0.2%. S&P +0.3%. Nasdaq +0.2%. Crude +0.2% to $99.55. Gold -2.1% to $1531.40.

Thursday's economic calendar:
8:30 Initial Jobless Claims
9:45 Chicago PMI
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
11:00 KC Fed Manufacturing
11:00 EIA Petroleum Inventories
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

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Obama to ask for higher debt limit. The Obama administration will ask Congress to raise the nation's borrowing limit by another $1.2T this week, marking the third and final increase from a deal reached over the summer. The government will approach within $100B of its current limit by Friday.

Italian borrowing costs fall. Italy sold €9B worth of 6-month bills at 3.251%, a huge improvement from 6.504% on November 25. The ten-year yield dipped back below 7%, and was around 6.78% as of 5:20 ET.

Banks tap ECB. Use of the ECB's overnight deposit facility hit a new all-time high, with banks depositing €452.034B ($589.7B) last night, up from a high of €411.813B the night before.

Cavium disappoints on Q4. Shares of Cavium (CAVM) fell 5.9% in post-market trading after the company became the latest chipmaker to issue a Q4 warning. The company now expects revenue of $56M-$57M for the quarter, below a $61.6M consensus. Cavium blamed weak demand from a variety of market segments, as well as a "hub transition" at a major customer (most likely Cisco).

Firms pay for LCD price-fixing. Samsung (SSNLF.PK), Sharp (SHCAY.PK) and five other Asian electronics companies have agreed to pay $552M to settle allegations of price-fixing on LCD screens.

China not named as currency manipulator. The Treasury Department spent several paragraphs of its semi-annual report on exchange rates calling out China for manipulating the yuan to keep its value low, but stopped short of formally naming the country a "currency manipulator." The Treasury did note some signs that China is moving on the right path, including a 12% real appreciation in the yuan since June 2010 along with a decline in China's trade surplus.

NYT sells regional papers. The New York Times Co. (NYT) announced it had agreed to sell its Regional Media Group, which owns 16 regional newspapers and various other publications, to privately-owned Halifax Media Holdings for $143M in cash ($150M in post-tax proceeds). The transaction is expected to close in Q1 2012.

IPOs fail to impress in 2011. Despite much talk about an IPO comeback, this year will close out with fewer IPOs than there were in 2010, while money raised in the offerings will be ~6% lower than last year and ~40% below the 2007 peak. Among companies that did manage a U.S. offering, around 2/3 are now trading below their IPO price.

Obama names Fed board replacements. President Obama plans to nominate Harvard finance professor Jeremy Stein and Jerome Powell, a former Bush official and P-E executive, to fill the two vacancies on the Federal Reserve Board.

Court to review BofA settlement. A U.S. appeals court will review whether BofA's (BAC) $8.5B MBS settlement should be sent back to a New York state court for approval; some institutional investors want the case to stay in federal court where it will be easier to negotiate higher payouts. A ruling is expected within 60 days.

Court delays lawsuit against Citi. A federal appeals court agreed to the SEC's request to place an emergency hold on its fraud lawsuit against Citigroup (C). The regulatory agency made the request in order to ensure it can continue settling enforcement cases without requiring corporate defendants to address whether they did anything wrong, a practice which had recently been called into question by the court.

General Re eyes Korea purchase. Berkshire's (BRK.A) General Re is interested in buying Tong Yang Life Insurance to tap into the promising South Korean market. Tong Yang's majority stakeholder Vogo Fund is looking to sell its 60.7% stake worth ~937B won ($808.7M), and General Re has reportedly signed a confidentiality agreement to participate in the deal.

AIG settlement approved. A federal judge approved a $450M settlement between AIG (AIG) and rival insurers. The settlement addresses claims AIG had incorrectly reported the size of its workers' compensation business in the 1980s and 1990s, which in turn allowed it to make smaller contributions to state-mandated pools for uninsured workers.

BP cleared in Alaska. A federal judge ended BP's (BP) three-year probation for the negligent discharge of oil in Alaska in 2007.

Today's Markets:
In Asia, Japan -0.2% to 8424. Hong Kong -0.6% to 18519. China +0.2% to 2170. India -0.9% to 15728.
In Europe, at midday, London +0.6%. Paris +0.6%. Frankfurt +0.1%.
Futures at 7:00: Dow +0.2%. S&P +0.3%. Nasdaq +0.25%. Crude -0.4% to $100.94. Gold -0.4% to $1589.50.

Wednesday's economic calendar:
7:00 MBA Mortgage Applications
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales

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BofA may need to sell more assets. Lagging its peers in compliance with new capital rules, BofA (BAC) is reportedly considering additional asset sales. One analyst thinks the bank may need as much as an extra $45B in capital by 2019, but having notched $50B of asset sales since Jan. 2010, BofA may not have many big ticket items left. Premarket: BAC -0.7% (7:00 ET).

Samsung aims to boost sales. Samsung (SSNLF.PK) aims to lift its global handset sales by 15% next year to 374M units by focusing on smartphones, according to a report in the Korea Economic Daily. The move would give Samsung a stronger footing against larger rival Nokia (NOK), whose handset sales are projected to fall 5% next year to 399M. Separately, Samsung's board approved a plan to buy Sony's (SNE) entire stake in their LCD joint venture for 1.08T won ($939M).

Sears to take Q4 charge. Sears (SHLD) has said it will close 100-120 Kmart and Sears stores, and will take Q4 charges of $1.6B-2.4B. Quarter-to-date comparable sales are off 5.2%. Given the disappointing performance and "the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce on-going expenses, adjust our asset base, and accelerate the transformation of our business model."

RIM investors pressure board. RIM (RIMM) shares hit a multi-year low this month, capping off a disastrous year which saw delays in product rollout and lost marketshare. Investors and analysts alike are pushing the board to get a grip on the company's direction, either by forcing a strategic shift, ousting co-CEOS Jim Balsillie and Mike Lazaridis, or selling the company outright.

Japan boosts ties with India, China. Japan is poised to unveil a currency-swap line with India, valued at around $10B. On Sunday, Japan and China said they will promote direct trading of yen and yuan without using dollars, and will encourage the development of a market for the exchange to cut the cost for companies. It's part of a broad and innovative package of financial agreements designed to tighten ties between the two giants.

BoJ sees heightened risks. Minutes from the recent Bank of Japan meeting show a "few" board members were concerned about the possibility "downside risks to the economy had increased somewhat since the previous meeting," mostly in light of the eurozone's debt crisis and the yen's appreciation. The report didn't specify how many members shared that view.

China sets rare earth quota. China set the first tranche of rare earth export quotas at 10,546 tons for 2012, and said overall export quotas for 2012 will be unchanged from 2011 to "guarantee" international demand and keep supplies "basically stable." The 2011 quota was 30,184 tons, but less than half of that was actually exported in the first 11 months. Stocks to watch in response: [[MCP]], [[REE]], [[SHZ]], [[AVL]], [[REMX]].

Santa spurs shoppers. Online shopping jumped 16.4% on Christmas from the year before, according to data released by IBM. The dollar value of purchases made on mobile devices jumped 172.9%, and nearly 7% of all online purchases on Christmas Day were made using iPads. The uptick appeared poised to continue yesterday, though final data isn't yet available.

Intel case back to state court. Intel's (INTC) last major antitrust fight is heading back to state court, after a judge on Friday canceled a Feb. 14 federal trial. NY AG Eric Schneiderman had asked for the case to be turfed back to the state level after recent developments limited the amount of damages New York could seek in a federal case.

SEC crunches the numbers. Still stinging from its failure to detect Madoff's Ponzi scheme, the SEC is training its focus on a list of around 100 hedge funds whose performance seems too good to be true. Encouraged by initial results from its number-crunching, the SEC will also look at returns from mutual funds and P-E funds.

Brazil beats out the U.K. The U.K. has lost its spot as sixth-largest economy to Brazil, says the Center for Economics and Business Research, as the resource-rich South American economy has surged on exports to China. The latest CEBR forecasts revise global growth down to +2.5% in 2012, though the figure could fall to +1.1% should "one or more countries” leave the euro.

Cameron heads to trial. Cameron International (CAM) has struck out in its effort to derail a February non-jury trial over which companies should be blamed for the Deepwater Horizon oil spill. Cameron had been angling for a trial with a jury, but the U.S. Court of Appeals rejected Cameron's claims.

U.S. firms eye European assets. U.S. financial firms are taking advantage of the eurozone's debt crisis to pick up assets owned by cash-strapped regional banks. European financial institutions may shed as much as $3T in assets over the next 18 months. Deals are likely to spike ahead of the June deadline for European banks to raise more than €114B in new capital.

DoJ reverses on Web gambling. The Justice Department has reversed its long-standing opposition to many forms of online gambling, a potential boon to states that view online gambling as a good way to raise tax revenue. The DoJ brief, written in September but only made public on Friday, dealt specifically with lottery tickets, but opens the door for Internet poker and other forms of online betting that don't involve sports.

Today's Markets:
In Asia, Japan -0.5% to 8441. Hong Kong closed. China -1.1% to 2166. India -0.6% to 15874. South Korea -0.8% to 1842.
In Europe, at midday, London closed. Paris +0.5%. Frankfurt +0.4%.
Futures at 7:00: Dow +0.02%. S&P -0.02%. Nasdaq +0.2%. Crude +0.3% to $99.98. Gold -0.4% to $1599.10.

Tuesday's economic calendar:
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 Richmond Fed Mfg.
10:00 State Street Investor Confidence Index
10:30 Dallas Fed Manufacturing Outlook

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By Yigal Grayeff and the Market Currents team

AIG CEO to delay retirement. AIG (AIG) CEO Robert Benmosche, who previously said he planned to retire in 2012, has told the company's board he'd like to stay in his position for another year. The directors don't have to approve Benmosche's decision for him to extend his tenure.

Congress set to OK payroll tax cut extension. The House is expected to pass a two-month extension to the payroll tax cut today after House Republicans yesterday caved into pressure to drop their opposition to the bill, which has already been passed in the Senate. House Speaker John Boehner said his side relented in return for new language in the legislation to make it easy for business payroll staff to process the tax relief.

Portugal sells utility stake for $3.5B to Chinese firm. China Three Gorges is acquiring Portugal's 21% stake in utility EDP (EDPFY.PK) for €2.7B ($3.5B), beating out E.On (EONGY.PK) and Eletrobras (EBR). The deal also includes Chinese investment in the wider economy, and is a crucial indicator of Portugal's ability to sell state assets in the face of its debt crisis.

China continues to fuel its expansion with $2.1B coal deal. China has made another commodities acquisition that will help fuel its growth as Australia's Gloucester Coal confirms that it's being bought by Yanzhou (YZC) for around A$2.1B ($2.1B). The deal values Gloucester at up to A$10.16 a share, or a 45% premium to its price on Monday, when trading was halted.

ECB's Stark rejects using IMF to bypass eurozone rules. The EU shouldn't use the IMF to circumvent the ban on central banks financing governments, and plans to do so might breach that principle, outgoing ECB Executive Board member Juergen Stark has told Die Welt. It would also mean that the EU and its member states would give away some of their decision-making powers. Stark is a long-time opponent of the ECB buying government bonds, and it's a major reason why he's leaving the bank.

Google+ growing but by how much? Google+ (GOOG) has attracted 150M active users, trailing only Facebook (450M+) and Sina's (SINA) Weibo (175M+) among social networks, GlobalWebIndex says. In contrast, comScore says Google+ had a more modest 66.8M unique visitors in November, well below Facebook, Twitter and LinkedIn (LNKD). Either way, it seems Google could be making headway in using its Web and mobile reach to spur Google+ uptake.

AT&T gets better news from regulators. Having been unable to convince regulators about its proposed $39B merger with T-Mobile, AT&T (T) has won approval for the $1.9B purchase of wireless spectrum from Qualcomm (QCOM). The companies expect to close the transaction "in the coming days," ahead of guidance for the end of Q1 2012.

Fed mulls signalling that rates will stay low into 2014. The Fed could signal at its next meeting that it could keep short-term interest rates near zero into 2014 or beyond, the idea being that such an assurance would cause markets to push long-term rates even lower and thus spur spending and investment. But as MarketBeat's Matt Phillips points out, while "real" interest rates are negative, "companies have tons of cash," and many consumers aren't interested in, or able to, take advantage of these rates.

Kodak selling unit, appoints co-President; shares surge. Eastman Kodak (EK) jumped 19.1% in post-market trading after the troubled company announced that it's selling its gelatin business to privately-owned Vion Food Group, and that it has elected General Counsel Laura Quatela as President. Quatela will hold the position in tandem with current President Philip Faraci.

Santander faces customer wrath over €4B bond losses. Banco Santander (STD) is facing a growing domestic backlash from hundreds of customers holding a combined €4B ($5.2B) of paper losses on bonds the bank sold four years ago. Customers say the bonds, which are due to convert to common shares in October 2012, were riskier than Santander had disclosed, and at least two individuals have already filed lawsuits.

FCC looks to relax media-ownership laws. The FCC wants to ease the limits on the ability of firms to own a newspaper and a TV or radio station in the same local markets. Commissioner Robert McDowell believes the rule is anachronistic given that people increasingly get news on the Internet. The change could benefit the likes of News Corp. (NWS) and Tribune Co.

COF under scrutiny for improper debt-collection practices. The Wall Street Journal has shined a light on Capital One's (COF) little-known debt-collection practices, saying the company has been accused of pursuing 15,500 "erroneous claims" to recover loans that have already been discharged in bankruptcy cases. COF disputes the figure and denies one judge's suspicion that the bank makes "conscious, malevolent" efforts to try to collect such debt.

Today's Markets:
In Asia, Japan closed. Hong Kong +1.4% to 18629. China +0.8% to 2205. India -0.5% to 15739.
In Europe, at midday, London +1.0%. Paris +1.2%. Frankfurt +0.3%.
Futures at 7:00: Dow +0.4%. S&P +0.5%. Nasdaq +0.35%. Crude +0.3% to $99.80. Gold -0.2% to $1607.60.

Friday's economic calendar:
8:30 Durable Goods
8:30 Personal Income and Outlays
10:00 New Home Sales

For full real-time earnings coverage, please click here.

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Fitch warns on U.S. rating as debt tops 100% of GDP. Fitch has again warned that rising U.S. debt is not consistent with maintaining an AAA rating, but said it probably will not reach a decision on a downgrade before 2013. Fitch said at least $3.5T of further deficit reduction measures will be needed to bring debt down to 90% of GDP by the second half of the decade. The warning comes as Zero Hedge calculates that U.S. debt now exceeds 100%.

Yahoo mulls sale of Asian ops in $17B deal. Yahoo’s (YHOO) board is expected to meet today to discuss selling its holdings in Alibaba (ALBCF.PK) and its Japanese affiliate back to their owners in a tricky tax-free deal valued at $17B, The New York Times reports. Given Yahoo's $19.8B market cap, the company's core U.S. ops could be worth only about $100M if you strip out its $2.7B in net cash and investments.

Greek creditors agreement looking shaky. Greece's creditors are resisting IMF pressure to take bigger losses on their holdings, Bloomberg reports. Vega Asset Management - which was one of the key negotiators in Greece's debt restructuring - has already threatened to sue if the losses are too steep, and walked away from the table earlier this week after reportedly (among other things) complaining about the ECB's refusal to take any losses on its holdings of Greek paper.

Toyota set to lose crown but forecasts 2012 recovery. Toyota (TM) has forecast that sales will jump next year to a record 8.48M vehicles as it recovers from the Japanese earthquake and the Thai floods. Those disasters will lead to a 6% drop this year to 7.9M units, which will probably cause Toyota to lose its crown to GM (GM) as the world's largest auto company by sales.

Chevron, Transocean staff face criminal charges in Brazil. Federal police in Brazil have recommended that criminal charges be brought against several Chevron (CVX) and Transocean (RIG) officials involved in November's oil spill. This is in addition to an $11B civil suit brought against the companies. The response to what looks to be a relatively minor spill is certain to give investors second thoughts before plowing into drilling off the Brazilian shore.

Deutsche Boerse, NYSE merger hitting the skids. NYSE (NYX) and Deutsche Boerse (DBOEY.PK) may have to directly lobby European Commissioners to obtain approval for their merger after being unable to assuage the concerns of EU antitrust officials about the deal's effects on the derivatives market, Reuters reports. The exchanges are likely to focus their arguments on the benefits to the EU of the transaction at a time the region is facing a deep crisis.

China warns of trade war over EU's carbon tax on airlines. China's state-run Xinhua News Agency has warned that it will be "difficult to avoid a trade war" in aviation after the EU's highest court said the bloc could impose carbon taxes on flights to and from the region. "This is a trade barrier in the name of environmental protection," Xinhua wrote.

Yanzhou Coal nears $2B purchase of Australia's Gloucester. Trading in Australia's Gloucester Coal was suspended today, as China's Yanzhou Coal (YZC) is expected to make a takeover bid of at least $2B. Sources say an announcement could come today or early tomorrow.

Hedge funds sue Deutsche Bank over $1B Madoff claims deal. Two hedge funds are suing Deutsche Bank (DB) for dragging its feet on a $1B deal to buy their claims for Madoff-related losses. Prompting the firms to action were recent court decisions limiting the ability of trustee Irving Picard to further recover money.

SEC criticized over Koss settlement. The SEC has received another wrist slap for its weak enforcement actions, this time in connection to a proposed settlement with Koss Corp. (KOSS) over alleged accounting fraud. District Judge Rudolph Randa said the SEC was "vague" and failed to prove that penalties against the former CEO were fair, and cited Judge Jed Rakoff's Citi ruling last month.

Roche open to $3B deal. Roche (RHHBY.PK) CEO Severin Schwan has said the Swiss drugmaker is open to an M&A of more than $3B, as well as to smaller purchases also. Schwan wants deals that would fit Roche's focus on medicines which can be sold with diagnostic tools that facilitate tailored treatments for patients.

Oshkosh steps up fight to ward off Icahn. Truck maker Oshkosh (OSK) has sent shareholders a proxy card asking them to ignore Carl Icahn's efforts to install his own board members. Icahn, who has a 10% stake, is pushing for a tie-up with Navistar (NAV).

FTC reviews EMI sales. The FTC is reportedly taking the lead in reviewing Citi's (C) break-up sale of EMI to Universal Music (VIVHY.PK) and Sony (SNE), with sources saying the agency has to play point because the Justice Department has been too busy cracking apart the AT&T/T-Mobile deal.

Today's Markets:
In Asia, Japan -0.8% to 8395. Hong Kong -0.2% to 18378. China -0.2% to 2186. India +0.8% to 15813.
In Europe, at midday, London +1.2%. Paris +1.4%. Frankfurt +1.1%.
Futures at 7:00: Dow +0.4%. S&P +0.5%. Nasdaq +0.5%. Crude +0.3% to $98.98. Gold +0.1% to $1614.50.

Thursday's economic calendar:
8:30 GDP Q3
8:30 Initial Jobless Claims
8:30 Chicago Fed National Activity Index
8:30 Corporate Profits
9:55 Reuters/UofM Consumer Sentiment
10:00 FHFA Housing Price Index
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Earnings Results: Companies that beat EPS expectations last night and today include Bed Bath & Beyond (BBBY), Tibco Software (TIBX).

Those in line include Steelcase (SCS), Herman Miller (MLHR).

Those that missed forecasts include Micron Technology (MU).

For full real-time earnings coverage, please click here.

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by Yigal Grayeff and the Market Currents team

EU banks borrow €489B from ECB. EU markets have given up gains they made after Santa Claus - alias Mario Draghi - provided 523 EU banks a total of €489B ($641B) in the ECB's "longer-term refinancing operation" in which it offered three-year loans at its average benchmark rate of 1%. The figure is well above a consensus of €310B, but while the loans may avoid a liquidity crunch, Capital Economics is "skeptical...that the operation will ease the sovereign debt crisis."

Oracle misses forecasts for first time in ten years. Oracle (ORCL) shares slumped 8% in post-market trading and took their peers down with them after the company reported results that missed forecasts for the first time in a decade. FQ2 adjusted EPS rose 6% to $0.54 and revenue edged up 2% to $8.8B, with the company suffering weakness in EMEA and the Americas, and in hardware and new software licenses. Given Oracle's reputation as a "safe harbor" during times of economic softening, concerns about slowing IT spending may well be on many investors' minds today.

RIM attracts interest from Amazon, Nokia and Microsoft. RIM (RIMM) shares surged 11.9% premarket on reports that the ailing company was the subject of acquisition overtures from Amazon (AMZN), and was eyed by Nokia (NOK) and Microsoft (MSFT) for a possible joint bid. RIM spurned Amazon because it prefers to fix its problems on its own, a move that Forbes' Eric Savitz castigated. "I’m actually not sure what is more shocking: the idea that Amazon was interested in buying RIM, or the fact that RIM cut them off and said no," Savitz wrote.

EU court sets up scrap with U.S. over carbon tax. The European Court of Justice has ruled that the EU can make airlines flying to or from the region's airports pay to offset their carbon emissions from January 1. U.S. airlines stand to lose an estimated $3.1B between 2012 and 2020, and are unsurprisingly hostile, as is the U.S., where Congress has proposed legislation that would make it illegal to comply with the EU law. Hillary Clinton has also made threats.

North Korean army backs Kim Jong Un but will share power. North Korea's military looks to be ensuring stability by pledging its allegiance to Kim Jong Un, the son of the late Kim Jong Il, Reuters reports. However, the new ruler will have to share power with the army in a coterie that will also include Kim Jong Un's uncle.

Moody's warns Britain. Maybe trying to get on France's good side, Moody's has fired a shot at the U.K., warning that its deteriorating public finances and growth outlook have seriously crimped its ability to retain a AAA rating. Being outside the euro is no help: "No EU sovereign rating can be considered immune to this crisis," Moody's said.

BOJ gets gloomier... The Bank of Japan has lowered its outlook for the economy for the second month in a row, saying that the pick-up in activity has paused, and that there are spillover risks from the U.S. and the eurozone. Data released earlier showed Japan's exports fell 4.5% in November from a year earlier, the second consecutive month of declines.

...while China tries to stay positive. China's growth momentum is "generally sound," Premier Wen Jiabao said, but the economy is facing several challenges. Additional comments suggest China is bracing for a prolonged downturn in the U.S. and eurozone by boosting domestic demand and focusing on emerging markets.

California sues Freddie and Fannie. California AG Kamala Harris has sued Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) to force them to comply with a subpoena to hand over documents they refused to provide. Harris' filing also alleges that the mortgage giants may have violated securities laws over the housing-related debt they issue.

Tokio Marine to buy Delphi in $2.7B deal. Tokio Marine Holdings (TKOMY.PK) is to acquire Delphi Financial Group (DFG) for $2.7B, including a special dividend. The purchase is part of a larger trend of Japanese firms capitalizing on the strong yen to go shopping abroad, hoping to offset weak growth at home.

HSBC continues to shrink. HSBC (HBC) is pulling out of private banking in Japan as it continues to streamline its operations, and is selling its business in the country to Credit Suisse (CS) for an undisclosed sum. The value of the gross assets included in the sale was $2.7B as of the end of October.

Gas costs soar for consumers. Although pump prices have been falling, consumers are spending more money than ever on gasoline. Based on recent demand trends, consumers will have laid out $481B on gas in 2011 vs. $389B last year. Break it down, and each U.S. household will have spent an average of $4,155, 8.4% of an average family's income.

Today's Markets:
In Asia, Japan +1.5% to 8460. Hong Kong +1.9% to 18416. China -1.1% to 2191. India +3.4% to 15685.
In Europe, at midday, London +0.2%. Paris +0.3%. Frankfurt +0.3%.
Futures at 7:00: Dow +0.3%. S&P +0.2%. Nasdaq +0.25%. Crude +0.3% to $97.53. Gold +0.5% to $1625.

Wednesday's economic calendar:
7:00 MBA Mortgage Applications
10:00 Existing Home Sales
10:30 EIA Petroleum Inventories
1:00 PM Results of $29B, 7-Year Bond Auction

Earnings Results: Companies that beat EPS expectations last night and today include Cintas (CTAS), Nike (NKE), Paychex (PAYX).

Those in line include Jabil Circuit (JBL).

Those that missed forecasts include Oracle (ORCL).

For full real-time earnings coverage, please click here.

Notable earnings before Wednesday's open: [[ATU]], [[KBH]], [[KMX]], [[SHAW]], [[WAG]]

Notable earnings after Wednesday's close: [[BBBY]], [[MU]], [[TIBX]]

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EU misses fundraising target. The EU announced it had raised €150B (less than €200B hoped) from member states to lend to the IMF to lend back to needy member states. Notably absent from any contribution is the U.K. Also, Sweden, Poland, Denmark, and the Czech Republic indicated a willingness to take part but have to run it by their parliaments first. Yes, Spain and Italy are chipping in, to the tune of €38.3B. In further eurozone news, the ECB said yesterday in its twice-yearly Financial Stability Report that risks to the eurozone's financial system have risen "substantially" in H2, and contagion from the region's debt crisis could have a global impact.

Payroll tax cut still up in the air. House Republicans scuppered plans for a direct vote today on the payroll tax cut, and instead will hold a vote this morning on whether to call for a conference committee with Senate negotiators to work out a compromise on the legislation. The tax break will expire Dec. 31 if no action is taken.

Apple wins ruling against HTC. Apple (AAPL) has prevailed in an infringement case against HTC. The U.S. International Trade Commission ruled HTC is violating Apple's patents, and has ordered a U.S. import ban on certain products to go into effect in April. HTC will likely try to negotiate a settlement ahead of time, though Apple's uncompromising legal stance could make things difficult.

Red Hat disappoints. Red Hat (RHT) reported Q3 earnings yesterday, narrowly beating on EPS and reporting revenue in-line, but shares fell sharply in after hours trading. The company's deferred revenue balance reached $819.6M, up 20% Y/Y but less than 1% Q/Q. Red Hat guided for FQ4 revenue of $289M-$292M and EPS of $0.26-$0.27; the latter meshes well with a consensus of $0.26, but the former is below a consensus of $292.5M. Shares, which were down over 10% in the AH session, have recovered slightly and are currently -7.7% premarket (6:00 ET).

Lockheed nabs Japan deal. As expected, Lockheed Martin (LMT) won a contract to supply 42 stealth F-35 jets to Japan for an initial $5.33B, beating Boeing (BA) and the Eurofighter Typhoon. The F-35 has been beset by problems, but the deal could now be followed by a South Korean order for 60 jets.

Google, KKR get sunny on solar. Google (GOOG) and KKR (KKR) announced today a joint investment in a California solar-power project, becoming majority owners of four solar farms and underscoring investor interest in the field even as some government incentives are phased out. Recurrent Energy, a subsidiary of Sharp (SHCAY.PK) and the project's developer, will remain a minority owner and operate the facilities.

Apple invests in flash storage. Apple (AAPL) is buying Israel's Anobit, a maker of flash storage technology, for $500M, and plans to open an R&D center in Israel, its first outside the U.S.

AstraZeneca takes charge on drug studies. AstraZeneca (AZN) will take a Q4 pretax charge of $381.5M after two disappointing drug studies. The company confirmed its prior guidance that full-year core EPS will be in the range of $7.20-7.40, but said it's now likely to be in the lower half of this range. Shares -1.4% premarket (6:20 ET).

Japan eyes yen, diversification. Japan is stepping up its efforts against the appreciating yen, with plans to raise the issuance limit for bills to fund currency intervention to ¥195T ($2.5T). Finmin Jun Azumi says the increase will allow him to take "decisive" actions when needed. Azumi also said Japan should consider holding Chinese government bonds as a way to strengthen ties between the two countries, marking the first clear indication that Japan intends to shift part of its foreign reserves into yuan-denominated Chinese debt. At the moment, Japan's $1.3T reserves are mainly denominated in dollars, with a small portion in euros.

U.K. banks face ring-fencing rule. As expected, U.K. finmin George Osborne approved a panel's recommendations that banks should ring-fence their retail operations from investment banking. Osborne estimated the cost to banks of the reforms at £3.5B-8B ($5.4B-12.4B). The loss-absorbing capacity of big banks will be at least 17% of equity capital, which will apply to their U.K. and non-U.K. ops, "except where they can demonstrate that they do not pose a threat to the U.K. taxpayer." The question is where that leaves HSBC (HBC), given its vast overseas balance sheet. Osborne also backed the overhaul of RBS's (RBS) investment banking arm. In yesterday's trading, [[RBS]] -5.25%, [[BCS]] -3.6%, [[HBC]] -1.2%, [[LYG]] -8%.

BAC drops below $5. Bank of America (BAC) shares dropped to a $4 handle for the first time since the week of March 6, 2009 when American stocks overall put in their epic bear market bottom. If the stock remains below $5, some money managers will be forced to sell it. Shares closed -4.1% to $4.99, and are currently +2.3% premarket to $5.10 (6:30 ET).

RBA minutes reveal eurozone fears. Minutes from the RBA's most recent meeting show the bank lowered its benchmark rate because of the “non-trivial possibility of a very sharp contraction” in Europe and had seen no “strong need” to reduce rates based on the domestic outlook.

Sweden cuts rates. Sweden’s Riksbank cut its repo rate 25 bps to 1.75% this morning. Eurozone troubles are having a "dampening effect" on the Swedish economy, and a deterioration may force Sweden to further lower its benchmark rate.

Today's Markets:
In Asia, Japan +0.5% to 8336. Hong Kong +0.1% to 18080. China -0.1% to 2216. India -1.3% to 15175.
In Europe, at midday, London -0.2%. Paris +0.9%. Frankfurt +0.9%.
Futures at 7:00: Dow +0.6%. S&P +0.8%. Nasdaq +0.8%. Crude +1.3% to $95.13. Gold +0.7% to $1607.90.

Tuesday's economic calendar:
7:45 ICSC Retail Store Sales
8:30 Housing Starts
8:55 Redbook Chain Store Sales
1:00 PM Results of $35B, 5-Year Bond Auction

Notable earnings before Tuesday's open: [[CAG]], [[CCL]], [[GIS]], [[JEF]], [[NAV]]

Notable earnings after Tuesday's close: [[CTAS]], [[JBL]], [[NKE]], [[ORCL]], [[PAYX]]

For full real-time earnings coverage, please click here.

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Discuss today's news here.

Exxon eyes Gulf Keystone at £7B valuation. Exxon (XOM) has approached Gulf Keystone Petroleum (GUKYF.PK) about a deal that could value the company at about £7B ($10.8B), nearly five times its market cap on Friday, The Independent reports. Gulf is sitting on a huge crude discovery in Kurdistan, but the government is thought to want an oil giant involved to develop the field. Other majors - including Chevron (CVX) and Sinopec (SNP) - may also be interested. Gulf's shares were +25% midday in London.

AT&T looks to be giving up on T-Mobile. AT&T's (T) talks to sell T-Mobile (DTEGY.PK) assets have gone cold, sources say, the strongest sign to date that the $39B deal may fall apart. A divestiture could have helped push the transaction past regulators, so AT&T will probably have to choose now between fighting the DoJ in court or settling for a scaled-back arrangement such as a JV or minority stake.

EU to discuss €200B IMF funding. EU finance ministers will hold a conference call today to discuss €200B ($261B) in additional funding through the IMF, and to begin working out the details of new budget rules as part of the eurozone's proposed tighter fiscal union. However, don't expect the U.K. to easily part with the £25B ($38.8B) that the EU wants it to contribute.

GOP divided over payroll tax cut extension. A House vote today on a two-month extension to the payroll tax cut is in doubt after Republicans expressed strong objections to the bill despite their colleagues helping to pass the measure in the Senate following a deal with the Democrats. House Speaker John Boehner wants a year's extension, saying the shorter time period would create uncertainty for workers and employers. However, there is major disagreement over how to pay for the longer extension.

U.K. to accept bank panel's recommendations. U.K. Finance Minister George Osborne is expected to say today that he will accept most of the Vickers Commission's bank reform proposals, including a firewall between their retail and wholesale businesses. However, plans for strengthened capital rules will probably be delayed to fit in with an EU timetable, and, in a major boost for HSBC (HBC) and Standard Chartered (SCBFF.PK), could be limited to a bank's British operations.

Iran embargo talks stepped up. The U.S. and EU are seeking assurances from major oil states, such as Saudi Arabia, Kuwait and the UAE, that they would increase exports in order to keep markets calm if an embargo is placed on Iranian oil and its central bank. Officials from 11 countries are due to meet tomorrow in Rome.

Eldorado to buy European Goldfields for $2.6B. Eldorado Gold (EGO) said yesterday that it will acquire European Goldfields (EGFDF.PK) for around C$2.5B ($2.41B). The deal enhances Eldorado's project pipeline and creates a "premier high growth, low cost intermediate gold producer" with a market cap of C$11B.

Iraq, American troops face uncertainty as U.S. leaves. The last U.S. troops left Iraq yesterday, leaving the OPEC country facing the continued threats of a Sunni Islamist insurgency, rival Shi'ite militias and foreign meddling, and overspill from Syria. The government is also in dispute with the semi-autonomous Kurdish region over oil and territory. Young U.S. veterans returning from Iraq can expect to face a tough time finding work should they rejoin civilian life: the jobless rate for those aged 20-24 averages 30%, more than double that of their peers.

Money runs from EU and China. The capital flight out of the eurozone continues, with investors turning to forex, real estate and investments overseas to protect themselves in the event of a eurozone break-up or a series of bank failures. Unsurprisingly, the trend is more pronounced in Greece, Portugal and Italy. In China, capital flowed out in November for the second month in a row - the first back-to-back decline in over a decade. Economist Ren Xianfang said this is just the beginning.

Saab runs out of gas as GM rejects reorganization. Saab Automotive has filed for bankruptcy in Sweden, hours ahead of a planned hearing. The longtime carmaker's proposed plans for a restructuring were rejected over the weekend by former owners GM (GM).

Employment picture looking up - Manpower. Businesses expect to increase staff by a seasonally adjusted net 9% in Q1 2012, a study from Manpower (MAN) shows, the most positive number in over a year. The industries with the best outlook are mining, and hospitality and leisure, while even weak sectors such as construction and government reported slight improvements.

House to legislate on insider trading early next year. After recently delaying measures to ban Congressmen from insider trading, the House will take up legislation on the issue early next year, said Eric Cantor. The bill, called the Stop Trading on Congressional Knowledge, or STOCK Act, has the support of over 230 members; a Senate panel passed a similar measure last week.

Two banks shut on Friday. Regulators closed two banks on Friday, one in Florida and the other in Arizona, bringing to 92 the number of failures this year. The estimated cost to the FDIC's deposit-insurance fund will be $68.8M.

Today's Markets:
In Asia, Japan -1.3% to 8296. Hong Kong -1.2% to 18070. China -0.3% to 2218. India -0.7% to 15379.
In Europe, at midday, London +0.1%. Paris +1.0%. Frankfurt +1.0%.
Futures at 7:00: Dow +0.5%. S&P +0.7%. Nasdaq +0.8%. Crude +0.3% to $93.83. Gold flat at $1597.80.

Monday's economic calendar:
10:00 NAHB Housing Market Index
1:15 PM Fed's Lacker: Economic Outlook

Notable earnings after Monday's close: [[RHT]]

For full real-time earnings coverage, please click here.

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EFSF draft warns of euro breakup. The eurozone's EFSF bailout fund is debating whether the final version of its investor prospectus should include "risk factors;" the most recent draft warns that a country might leave the eurozone, or that the euro might cease to be a "lawful currency" altogether. Just to put off investors even more, Italy and Spain are due to contribute 32% to the fund. The debt can also be used "for repos with commercial banks to support the EFSF's liquidity management" - i.e., it can be borrowed against over and over.

Congress reaches $1T deal to avoid shutdown. Congress is expected to vote today on a tentative $1T deal that was reached yesterday, and would fund several federal agencies through the end of September next year and avoid a government shutdown this weekend. Separately, legislators continue to work on an agreement to extend the payroll tax cut and long-term unemployment benefits.

Fitch wields knife to banks. Fitch has downgraded the credit ratings of eight major Western banks to A from either A+ or AA-, including Bank of America ([[BAC]]), Barclays ([[BCS]]), Goldman Sachs (GS) and Morgan Stanley (MS). Fitch said it made the decision because the banks' business models are "particularly sensitive" to economic and regulatory challenges.

RIM plunges on dismal forecast. The misery continues for RIM (RIMM), whose shares sunk 7.6% postmarket after it gave FQ4 EPS, revenue and BlackBerry shipment forecasts below analyst expectations. Adjusted FQ3 EPS fell 27% to $1.27 as revenue slipped 5.5% to $5.17B, and RIM took a big charge on its woeful PlayBook tablet launch. One bright spot was a 35% lift in RIM's subscription base, a sign that it's still attracting new customers for its core product, especially in emerging markets.

Amgen CEO Kevin Sharer to step down. Amgen (AMGN) CEO Kevin Sharer will retire in May and be replaced by company President and COO Robert Bradway. Annual revenue at the biotech has risen to $16B from $3.6B in 2000, when Sharer took over, but the share price is 4.9% lower. RBC Capital analyst Michael Yee says the new CEO will need to "reinvigorate a focus of innovation for new products and a focus on cutting expenses." Are both those possible?

United Rentals to buy RSC in $4.2B deal. In a transction that will create a leader in the North American equipment rental industry, United Rentals (URI) is to acquire RSC Holdings (RRR) in a cash-and-stock deal for a total enterprise value of $4.2B, including $2.3B in net debt. The $18 a share price represents a 58% premium to RSC's closing price of $11.37 yesterday.

Sony confident ahead of Vita launch. The handheld PlayStation Vita is due to hit stores in Japan tomorrow in Sony's (SNE) biggest product launch since the PlayStation 3 about five years ago. A Sony executive confirmed pre-launch orders have exceeded estimates, but how the Vita will hold up against the popularity of casual iPhone and Android games is a major question.

Tame inflation is forecast. November CPI data is due out this morning, with falling gasoline prices and large discounting by retailers in the run-up to Christmas expected to have kept inflation in check. Economists predict that CPI climbed a monthly 0.1%, or an annual 3.5%, after falling 0.1% in October. Core CPI is forecast at +0.1%, the same as in the prior month.

Russia to join WTO today. After 18 years of negotiations, Russia is due to join the WTO today, a move economists estimate will add 3% to its economy in the medium-term and 11% in the long run.

Lehman sues to stop $1.33B Archstone stake sale. Lehman is suing Bank of America (BAC) and Barclays (BCS) for breach of contract and is seeking an injunction preventing them from selling a 26.5% stake in apartment company Archstone to rival Equity Residential (EQR) for $1.33B. Lehman, which owns 47% of Archstone, wants to gain control of the firm so it can divest it for at least $6B.

EA to become EA. Electronic Arts (ERTS) will change its Nasdaq ticker to "EA," effective from Tuesday morning.

Today's Markets:
In Asia, Japan +0.3% to 8402. Hong Kong +1.4% to 18285. China +2.0% to 2225. India -2.2% to 15491.
In Europe, at midday, London +0.5%. Paris -0.1%. Frankfurt -0.1%.
Futures at 7:00: Dow +0.4%. S&P +0.5%. Nasdaq +0.5%. Crude -0.2% to $93.68. Gold +1.05% to $1593.70.

Friday's economic calendar:
8:30 Consumer Price Index
8:30 Real Earnings
9:30 Hearing: "The Euro Crisis and the U.S. Economy" (Dudley)
12:00 PM Fed's Fisher: Economic Outlook
4:15 PM Fed's Evans: "Econometric Tools for Policy Making" (.pdf)

Earnings Results: Companies that beat EPS expectations last night and today include Accenture (ACN), Adobe (ADBE), Research In Motion (RIMM).

For full real-time earnings coverage, please click here.

Notable earnings before Friday's open: [[DRI]]

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Authorities find missing MF Global cash. Regulators have discovered where the MF Global (MFGLQ.PK) funds went, Jill Sommers, who's heading the CFTC's review of the bankrupt brokerage, has said. Now it's a matter of working out which transactions were legitimate and which weren't before money can be returned to customers.

Lam to buy Novellus for $3.3B in stock. Chip equipment company Lam Research (LRCX) has agreed to acquire Novellus Systems (NVLS) in an all-stock transaction valued at $3.3B as the firms looks to challenge Applied Materials (AMAT). Novellus stockholders will receive 1.125 shares of Lam for each of their shares, valuing Novellus at $44.42 a share, or about 12.5% above its closing price yesterday.

Chevron says it hasn't received $10.7B Brazil lawsuit. Chevron (CVX) said it hasn’t received any formal notice of a Brazilian lawsuit against the oil giant and Transocean (RIG) seeking $10.7B in damages from an oil spill last month. Reports said the companies have been asked to suspend operations in Brazil by prosecutors. The move could be a major blow for each, with tapping the lush oil fields located off Brazil's shore part of both firms' strategic plans.

SEC mulls appeal of Rakoff's Citi ruling. In what would be a high risk strategy, the SEC is considering appealing Judge Jed Rakoff's rejection last month of a proposed $285M settlement between the agency and Citigroup (C), The Wall Street Journal reports. The SEC could of course use the verdict to try to negotiate a tougher settlement with Citigroup, but it hasn't done that so far.

EU banks will need to raise €200B. European banks will need to raise almost €200B in new capital, or cut their balance sheets by nearly 20%, in order to meet Basel III requirements that start taking effect in 2013, a new study from Boston Consulting Group shows. With credit markets increasingly tight, this would be no small feat. (U.S. and Asian banks face a collective shortfall of less than €70B.)

PMI falls in China and Europe. Flash PMI figures in China and the eurozone, including Germany, rose this month from November but the regions are still contracting. Regarding Germany, the reading is "a step in the right direction," said Markit economist Tim Moore, "but not enough to rescue what has been a subdued final quarter of 2011." Regarding China, "The growth momentum remains weak with additional downside risks from exports and the property market not yet fully filtering through," said HSBC's chief China economist.

RIM faces supply glut. RIM (RIMM), which reports FQ3 earnings after the close today, may be facing a supply glut of as many as 3.1M BlackBerrys and is expected to cut its sales target for the device. Analysts are also worried about pressure on margins, and a lackluster product line. The Street forecasts adjusted EPS of $1.19 and revenue of $5.26B.

SNB pledges to buy "unlimited quantities" of forex. The euro was lower against the Swiss franc despite the Swiss National Bank reiterating that the franc is still too high and should continue to weaken over time. The SNB is prepared to buy forex in "unlimited quantities," it said, and left in place its floor of 1.2 francs to the euro. At midday in Europe, the rate was 1.23 francs.

Nokia to launch U.S. fightback with bargain-priced Lumia. Nokia (NOK) plans to re-enter the U.S. smartphone market with the launch of the Lumia 710, which T-Mobile (DTEGY.PK) will sell at $50 each starting in January. That's a huge discount on the Lumia's €270 ($351) retail price in Europe.

Time running out to prevent government shutdown. House Republicans have introduced a $915B bill that would keep major government departments and services operating beyond the weekend, when temporary funding measures expire. A tentative agreement had been reached on Monday, but has hit problems as the White House also wants a deal on extending the payroll tax cut and unemployment benefits.

WTO warns on protectionism. The economic crisis threatens to increase protectionism, WTO Director General Pascal Lamy said, creating a "vicious circle where crisis erodes the capacity of governance to cooperate well." This will therefore make it more difficult to begin a recovery. "I’m afraid we have to expect difficult times for the world economy at large," Lamy said.

Apple plans R&D center in Israel. Apple (AAPL) intends to join dozens of multinational companies and open an R&D center in Israel, its first such center outside of its California headquarters, Globes reports. The speculation comes as VP of R&D Ed Frank visits the country and adds to a report that Apple is in advanced talks to buy Israeli flash storage firm Anobit.

Today's Markets:
In Asia, Japan -1.7% to 8377. Hong Kong -1.8% to 18027. Shanghai -2.1% to 2181. India -0.3% to 15836.
In Europe, at midday, London +0.6%. Paris +0.8%. Frankfurt +0.8%.
Futures at 7:00: Dow +0.4%. S&P +0.5%. Nasdaq +0.3%. Crude +0.5% to $95.44. Gold +0.3% to $1591.60.

Thursday's economic calendar:
8:30 Producer Price Index
8:30 Initial Jobless Claims
8:30 Empire State Mfg Survey
8:30 Current Account
9:00 Treasury International Capital
9:15 Industrial Production
10:00 Philly Fed Business Outlook
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Earnings Results: Companies that beat EPS expectations last night and today include Scholastic (SCHL), VeriFone (PAY).

Those in line include Nordson (NDSN), Pier 1 Imports (PIR).

For full real-time earnings coverage, please click here.

Notable earnings before Thursday's open: [[DFS]], [[FDX]], [[PIR]], [[RAD]]

Notable earnings after Thursday's close: [[ACN]], [[ADBE]], [[RIMM]]

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Apple eyes Israel's Anobit for up to $500M. Apple (AAPL) has finally found something to do with a fraction of its cash mountain: Reports out of Israel tip off that Apple is in advanced talks to buy flash storage firm Anobit for as much as $500M. The firm's chips are already embedded in devices such as the iPhone, iPad, and MacBook Air.

AOL to reorganize into four units. AOL (AOL) CEO Tim Armstrong plans to revive the struggling company with a reorganization in which he will combine its dial-up Internet access operations with its Web services, including AOL Instant Messenger. The idea is to get consumers with AOL accounts to use more of the company’s features. The new group will be part of four units, the others being advertising, local services and the Huffington Post media group.

AT&T has month to decide on T-Mobile deal. A judge has given AT&T (T) until January 12 to decide whether it wants to continue with its $39B acquisition of T-Mobile USA (DTEGY.PK). In reaction, AT&T said it was "considering whether and how to revise our current transaction to achieve the necessary regulatory approvals." Many experts believe the deal is doomed, with antitrust lawyer Evan Stewart saying it's "suffering the death by a thousand cuts."

Van Rompuy admits legal problems for fiscal union pact. European Council President Herman Van Rompuy hopes the EU's fiscal union pact will be finalized by March but admitted that legal issues will make it difficult to implement, especially because of Britain's veto. Van Rompuy's comments may well only add to the skepticism about the pact, as will doubts in Finland. "The more you hear from the European leaders, and the less you see implemented, the more skeptical you are," says JP Morgan strategist Rebecca Patterson.

Spanish and Belgian yields fall in auctions. As with Italy yesterday, despite the doubts surrounding the EU's fiscal union deal, yields fell in Spanish and Belgian bond auctions. Spain sold €4.94B of 12- and 18-month paper with yields about 100 basis points lower than a similar sale one month ago. Demand was strong, with the bid to cover ratio of 4.97 allowing the government to move more than the €3.25B-€4.25B it had hoped for.

Rio on course to take control of Ivanhoe. The way is open for Rio Tinto (RIO) to take over Canada's Ivanhoe Mines (IVN), in which it already owns 49%, after an arbitrator ruled that Ivanhoe's "poison pill" takeover defense doesn't apply to Rio. Controlling Ivanhoe, which is worth $15.3B, will give Rio a majority stake in the massive Oyu Tolgoi copper and gold project in Mongolia.

Liffe on the block to keep exchange merger alive. Deutsche Boerse (DBOEY.PK) and the NYSE (NYX) have formally offered to sell Liffe, the London-based derivatives exchange, in an effort to get their deal past the antitrust concerns of European regulators. The two also promise rivals better access to their clearinghouse, and will license the Eurex trading system to a 3rd party.

Pfizer's Lipitor loses 15% market share. Pfizer's (PFE) Lipitor cholesterol pill lost about 15% of its market share in the first few days after its patent protection ended on November 30. To keep shareholders sweet, Pfizer has expanded a buyback program by up to $10B and increased its dividend to $0.22 from $0.20. The pharmaceutical manufacturer has also named CEO Ian Read as Chairman.

Can the Fed get any more explicit? The FOMC is due to meet today for a policy meeting, when it will probably discuss becoming more explicit about the direction of interest rates, although it's likely to hold off on more stimulus. As market currents editor Stephen Alpher asks, though, how much more explicit can the Fed be? "Is there anyone who doesn't know zero rates will continue for several more years? What if something changes requiring rates to be adjusted? What good would an explicit forecast have been then?"

Agreement close over foreclosure practices - again. Mortgage lenders and authorities could reach a deal this week in which banks will pay states $19B to settle claims of inappropriate repossession practices, and $25B if California is involved, The Wall Street Journal reports. New York, which had left the talks, has remained "engaged" in the process. However, some issues still need to be ironed out, including the person who will act as monitor and enforce the agreement.

Deal agreed on 2012 government funding. Legislators could today publish a massive spending bill that will ensure funding through next year for certain government departments, including health and education. The publication will come after Republicans and Democrats agreed to a deal ahead of the expiry of temporary spending measures on Friday. While there are still some details to be completed, the upcoming Christmas break should keep minds focused.

Today's Markets:
In Asia, Japan -1.2% to 8553. Hong Kong -0.7% to 18447. China -1.9% to 2249. India +0.8% to 16003.
In Europe, at midday, London +0.7%. Paris +0.1%. Frankfurt +0.8%.
Futures at 7:00: Dow +0.3%. S&P +0.4%. Nasdaq +0.3%. Crude +0.8% to $98.53. Gold +0.1% to $1670.20.

Tuesday's economic calendar:
Q1 Manpower Quarterly U.S. Employment Outlook Survey
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:30 Retail Sales
8:55 Redbook Chain Store Sales
9:00 Ceridian-UCLA Pulse of Commerce Index
10:00 Business Inventories
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $21B, 10-Year Note Auction
2:15 PM FOMC Meeting

Earnings Results: Companies that beat EPS expectations last night and today include Synergetics (SURG).

Those in line include Avanir Pharmaceuticals (AVNR).

For full real-time earnings coverage, please click here.

Notable earnings before Tuesday's open: [[BBY]]

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FSA slams RBS and regulators over ABN Amro acquisition. In a long-awaited report, the U.K. Financial Services Authority has criticized RBS (RBS) and regulators over RBS's near-collapse in 2008 following its €72B ($96B) takeover of ABN Amro in partnership with two other banks. The watchdog listed six reasons for RBS's failure, including an over-reliance on risky short-term wholesale funding and weaknesses in the bank's capital position. The FSA now wants automatic sanctions for senior executives for bank failures, and increased oversight of financial mergers.

Fed may be unaware of final bank borrowers in lending scheme. Under the Fed's currency-swap plan, which has become a key tool to fight the eurozone crisis, the bank may not know who the final borrowers are. With the program, the Fed lends money to other central banks and they then confidentially loan it to local banks. Last week, the ECB's three-month dollar lending through swap lines surged to $50.7B.

EU faces Lehman event with huge CDS sales. The EU could be in for some Lehman-style chaos if there is a sovereign default: banks in the region have sold €178B ($238B) worth of CDSs on GIIPS bonds to each other and tried to hedge this by buying €169B worth. At least 38 banks have sold the instruments, with Deutsche Bank (DB) selling €37.4B and buying €34.5B.

Yields fall in latest Italian auction. Despite the skepticism of Moody's and others about the eurozone fiscal union deal, Italy's yields fell in its latest auction. The country sold €7B in 12-month bills, with the average yield dipping to 5.952% from 6.087% prior. However, the bid-to-cover ratio slipped to 1.92 from 1.99 prior, and in the secondary market, Italian 10 year BTPs were 42 bps higher at 6.78% at midday in Europe; those of Spain were +32 bps to 6.07%.

OECD nations will need to raise $10.5T next year. The gross borrowing needs of OECD governments will rise to $10.5T next year from $10.4T this year, with the share of short-term debt issuance 44%. This means that governments will have to regularly face the "animal spirits" of the market just as some, such as Italy and Spain, no longer enjoy a "risk-free" status.

Fannie and Freddie fees eyed to pay for payroll tax cut. Democrats and Republicans are considering boosting the fees that Fannie (FNMA.OB) and Freddie (FMCC.OB) collect from lenders as a way to finance the payroll tax cut. The idea could raise up to $38B over 10 years, but critics say the costs would be passed onto borrowers, while others don't like the precedent of using the mortgage giants as a "slush fund" for Congress and the administration.

Lehman looks to keep Archstone out of Equity's clutches. Lehman's (LEHMQ.PK) bankruptcy estate is preparing to match Equity Residential's (EQR) $1.33B bid to buy 26.5% of Archstone from Bank of America (BAC) and Barclays (BCS), The Wall Street Journal reports. Equity and Lehman want to gain control of all of the apartment company, with the latter already owning 47% and looking to eventually take it public.

SEC demands information over Iran, Syria sales. The SEC has told at least 12 U.S.-listed firms, including American Express (AXP) and Caterpillar (CAT), to disclose their activities with Syria, Iran and other "state sponsors" of terror, The Financial Times reports. Sales to these nations have dropped due to sanctions, although Sony (SNE) and others have used middle-men in Dubai to keep the supply lines open.

Zynga the standout in busy week for IPOs. This week marks the busiest for IPOs since March, with eleven companies seeking to raise up to $3.8B via offerings on U.S. exchanges. The standouts are online gaming company Zynga (ZYNG), which wants to obtain as much as $1B, and luxury-clothing designer Michael Kors (KORS), which is aiming for $792M.

California to cut $2.5B. California Governor Jerry Brown is expected to announce up to $2.5B in budget cuts following an estimated revenue shortfall of $3.7B, The Wall Street Journal reports. The savings could include a seven-day reduction of the school year, projected to save $1.5B.

Public early retirement packages under scrutiny. With people living longer and municipalities struggling to pay pension bills, critics question whether early retirement packages for public workers are sustainable. CNBC highlights one former public servant who will receive over $174,000 a year after retiring at 59. Defenders of the situation argue that attractive pensions help draw in and keep people in vital jobs such as teaching and fire-fighting.

Regulator seeks changes to Deutsche Boerse, NYSE deal. Deutsche Boerse's (DBOEY.PK) regulator, the state of Hesse, has legal reservations about the exchange operator's takeover of NYSE Euronext (NYX) and has submitted suggested amendments to the deal.

Today's Markets:
In Asia, Japan +1.4% to 8654. Hong Kong -0.1% to 18576. China -1.0% to 2292. India -2.1% to 15870.
In Europe, at midday, London -0.6%. Paris -1.1%. Frankfurt -1.6%.
Futures at 7:00: Dow -0.6%. S&P -0.7%. Nasdaq -0.5%. Crude -1.3% to $98.13. Gold -2% to $1682.50.

Monday's economic calendar:
1:00 PM Results of $32B, 3-Year Note Auction
2:00 PM Treasury Budget

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TI, Altera shares slump following warnings. Texas Instruments (TXN) was -6.4% premarket and Altera (ALTR) fell 6.1% post-market last night after issuing earnings warnings. TI cut its guidance for EPS to $0.21-$0.25 and for revenue to $3.19B-$3.33B, blaming "lower demand across a wide range of markets," save for wireless application processors. Altera said Q4 revenue will dive a quarterly 13%-16% - worse than a prior forecast of a 7%-11% drop - due to macroeconomic issues and weaker-than-expected customer sales.

Toyota issues profit warning as well. Toyota (TM) has sharply downgraded its earnings outlook for the fiscal year ending in March, due to a strong yen and the recent flooding in Thailand. The company now expects a net profit of ¥180B ($2.3B) vs. August's projection of ¥390B, revenue of ¥18.2T vs. ¥19T, and sales of 7.38M vehicles vs. 7.6M. Shares -1.9% premarket.

Wal-Mart probes employees for bribery. Wal-Mart (WMT) has begun an internal investigation into whether some of its workers violated the Foreign Corrupt Practices Act, and has disclosed the matter to the Justice Department. Wal-Mart said it "cannot reasonably estimate the potential liability, if any, related to these matters," but it doesn't expect a "material adverse effect."

Moody's downgrades three French banks. Moody's has cut the long-term ratings of BNP Paribas (BNPQY.PK), Credit Agricole (CRARY.PK) and SocGen (SCGLY.PK), citing the impact of funding constraints and deteriorating macroeconomic fundamentals on the French banks.

Japan seeks to penalize Citi and UBS. Japanese regulators are looking to impose penalties on Citigroup (C) and UBS (UBS) after their employees allegedly attempted to manipulate the Tokyo interbank offered rate.

Trade deficit widened in October, economists estimate. U.S. October trade figures are due out this morning, with economists expecting that the deficit widened to $44B from September's $43.1B, helped by increased consumer spending. Longer term, though, Bank of America economist Neil Dutta reckons that "the story is still one of rising exports and an ongoing narrowing of the trade gap."

Chinese data points to further cooling. Chinese inflation slowed more than expected to 4.2% in November from 5.5% previously, while its industrial output growth fell to 12.4% from 13.2%. The numbers potentially open the door for further stimulus by Beijing.

Household wealth falls the most since 2008. Americans got poorer in Q3 2011 as the net worth of households and non-profit groups fell by $2.4T to $57.4T, representing the sharpest drop since after Lehman's bankruptcy in September 2008. The latest decline was due to the falling values of stocks, pension funds and homes.

Lloyds CEO has to reapply for his job. Lloyds (LYG) CEO Antonio Horta-Osorio, who is on medical leave for stress, is going through such a thorough vetting process that he is effectively having to reapply for his job, The Financial Times reports. The board, which is due to meet next Thursday, is undecided amid shareholder concern about Horta-Osorio's ability to return to work.

Zynga IPO demand looking good. Zynga (ZNGA) has received enough orders to cover the 100M shares it's selling in its IPO, Bloomberg reports. IPO advisor Lise Buyer said that while Zynga is "off to a promising start," it's too early to draw conclusions. "An indication in the book is not a commitment. If the eurozone falls apart on the 9th, all bets are off."

Spotify takes on Panda. Spotify has unveiled a radio service that will offer "unlimited stations" and "unlimited skips." Until now, Spotify has largely operated in the market where users own the songs they listen to, but this latest move brings Spotify into head-to-head competition with Pandora (P).

Samsung beats Apple in Australia round. Samsung (SSNLF.PK) has won the latest Australian round of its global patent battle with Apple (AAPL) after the country's High Court lifted a ban on selling the Galaxy tablet, with the decision coming just in time for Christmas. However, a French court yesterday rejected Samsung's bid to block sales of the iPhone 4S in France.

Today's Markets:
In Asia, Japan -1.5% to 8536. Hong Kong -2.7% to 18586. China -0.6% to 2315. India -1.7% to 16213.
In Europe, at midday, London +0.8%. Paris +1.9%. Frankfurt +1.6%.
Futures at 7:00: Dow +0.8%. S&P +0.8%. Nasdaq +0.75%. Crude +0.6% to $98.93. Gold +0.7% to $1726.00.

Friday's economic calendar:
8:30 Trade Balance
9:55 Reuters/UofM Consumer Sentiment

Earnings Results: Companies that beat EPS expectations last night and today include Esterline (ESL), Cooper Companies (COO).

Those in line include Smith & Wesson (SWHC).

Those that missed forecasts include Pall (PLL).

For full real-time earnings coverage, please click here.

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Corzine faces House grilling. After staying silent amid all the furor surrounding MF Global's (MFGLQ.PK) collapse, Jon Corzine is appearing today at a House committee hearing to speak about his role in the fiasco. He has written a prepared statement (.pdf) in which he apologizes for the firm's failure but it's otherwise unclear at the time of writing whether he will answer questions or invoke the Fifth Amendment.

Central banks prepare for the end of the euro. While eurozone chief Jean-Claude Juncker today said the euro "is in no way at risk," some European central banks have reportedly started to weigh their options for a partial, or complete, eurozone breakdown. Ireland, for example, is said to be considering whether it needs to stock up on printing presses in case it must print new notes, while the Swiss are considering alternate currencies to use as a franc reference point.

BOE holds steady. As expected, the Bank of England is taking a wait-and-see approach, maintaining its benchmark rate at 0.5% and keeping its asset purchase program at £275B.

Costco CEO Sinegal signs off with profit rise. Costco's (COST) FQ1 EPS rose to $0.73 from $0.71 as revenue increased 12.5% to $21.18B but the company missed expectations, with an increase in membership fees and strong gasoline prices offset by one-time charges. Founder and CEO Jim Sinegal is in his last month of leading Costco before he will be replaced by COO Craig Jelinek in January.

SEC lets large investors stay in stealth mode. Fifty investors have this year used SEC rules to conceal their stakes in certain companies as they look to avoid "substantial harm" to their competitive positions. In addition to Warren Buffett when he bought IBM (IBM) shares, Ralph Whitworth used special disclosure exemptions for big investors to cloak his purchases of H-P (HPQ) stock, with Carl Icahn, Nelson Peltz and Deutsche Bank (DB) hiding investments as well.

Panel cancels insider vote. A House committee last night canceled a vote on measures to ban Congressmen from insider trading just a day after scheduling it. The GOP's Spencer Bachus said the reason for the move was a bi-partisan desire for more time to study the issue.

Boeing workers approve contract deal. Boeing (BA) machinists last night ratified a landmark four-year contract extension following weeks of talks. The agreement is likely to lead to the dismissal of a high-profile complaint filed by labor against Boeing in April.

Power of ratings agencies on the wane? The biggest U.S. banks will have to end their reliance on ratings agencies to assess the risk of their assets under proposed rules aimed at weakening the influence of the agencies. Some analysts reckon the regulations could reduce the demand for the services of S&P (MHP), Moody's (MCO) and Fitch (FMLCF.PK), although their power might already be on the wane given the little market reaction to S&P's EU warnings this week, including yesterday.

Exxon: Natural gas to replace coal as top power fuel. Exxon's (XOM) closely-watched outlook report is due out later today. Among the predictions: By 2025, natural gas will replace coal as the leading fuel for generating electricity in the U.S., and will be the world's No. 2 fuel source overall, while global energy demand will grow 30% by 2040.

GOP likely to block appointment of financial consumer chief. The Senate is due to vote today on who will be the first director of the Consumer Financial Protection Bureau, but don't expect an answer anytime soon. Republicans say they have the votes to block the Democrat's choice of former Ohio AG Richard Cordray. The problem, says the GOP, isn't Cordray himself but how the bureau is designed, and gridlock is likely until changes are made.

Chevron to invest $33B on capital and exploration next year. Chevron (CVX) yesterday unveiled a $32.7B capital and exploratory spending program for 2012, roughly the same amount as this year. Gas is the focus, with U.S. projects in the Gulf and Marcellus Shale, and the continuation of a multi-year LNG facility in Australia.

Alibaba searches for treasure trove. Alibaba (ALBIY.PK) is reportedly looking for up to $4B in debt financing for a deal to buy back the 40% of the company owned by Yahoo (YHOO). Analysts say Yahoo's stake is worth at least $9B.

Centenarian chairman to retire. Sir Run Run Shaw, the Chairman of Television Broadcasts (TVBCF.PK) and producer of Blade Runner, is to retire after over 40 years at Hong Kong’s biggest television company. He is a mere 104 years old.

Today's Markets:
In Asia, Japan -0.7% to 8665. Hong Kong -0.7% to 19108. China -0.1% to 2330. India flat at 16488.
In Europe, at midday, London +0.4%. Paris -0.1%. Frankfurt +0.2%.
Futures at 7:00: Dow flat. S&P -0.1%. Nasdaq +0.1%. Crude +0.4% to $100.92. Gold -0.1% to $1743.50.

Thursday's economic calendar:
7:00 BOE Rate Decision
7:45 ECB Rate Decision
8:30 Initial Jobless Claims
10:00 Wholesale Trade
10:30 EIA Natural Gas Inventory
12:00 PM Quarterly Flow of Funds Report
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Earnings Results: Companies that beat EPS expectations last night and today include G-III Apparel ([[GIII]]), Pacific Sunwear ([[PSUN]]).

Those that missed forecasts include Costco ([[COST]]), Verint Systems ([[VRNT]]).

For full real-time earnings coverage, please click here.

Notable earnings before Thursday's open: [[CIEN]], [[COST]], [[SFD]]

Notable earnings after Thursday's close: [[COO]], [[PLL]]

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Cameron threatens to block new EU treaty. U.K. PM David Cameron has warned he will veto the eurozone's deal to save itself unless he obtains assurances that future EU regulations won't threaten the City of London or free-market rules. The French and Germans would like the whole of the EU to sign any new treaty but say the eurozone is prepared to go it alone. Meanwhile, Timothy Geithner is in France on the latest leg of his European tour as he pushes the EU to get its act together.

Citigroup to chop 4,500 jobs. Citigroup (C) plans to slash 4,500 positions - a larger cut than was previously reported - and will take a $400M charge related to the move in Q4 2011. The layoffs, revealed yesterday by CEO Vikram Pandit, are part of an attempt to reduce costs amid slumping revenue and "unprecedented" market conditions. Given Citigroup's size, it's just "a drop in the bucket," an analyst said, and there could be more to come.

Germany puts on better show at bond auction. After its disastrous bond auction a couple of weeks ago, Germany received bids for €8.67B ($11.6B) of five-year notes at a sale today, more than the maximum target of €5B. The paper was sold with a yield of 1.11%.

MF Global's collapse hits farmers. It's not just Wall Street players getting hurt by MF Global's (MFGLQ.PK) bankruptcy - farmers who used MF as their broker are also waiting to get their money back. In the meantime, they are missing deadlines for buying next season's seeds and are delaying equipment purchases. The cash crunch could cause a major revision to the outlook for U.S. crops.

House panel to vote on banning insider trading in Congress. Like turkeys holding a vote to ban Thanksgiving, a House panel plans to decide next week on a rule to stop insider trading by Congressmen. Until now, legislators have been able to trade stocks based on information they receive in hearings, and apparently there's enough legal wiggle room that the SEC might not be able to make an enforcement case stick.

Bloomberg rebuts Bernanke's rebuttal. Responding to Ben Bernanke's rebuttal of "wildly inaccurate" news reports about the Fed's lending programs, Bloomberg calmly goes line by line through each of the Chairman's points. Market Currents editor Stephen Alpher reckons its a "TKO for Bloomberg."

China OKs Nestle's chocolate purchase. China has approved Nestle's (NSRGY.PK) plan to buy a 60% stake in Hsu Fu Chi, China's biggest confectioner. At $1.7B, it's one of the biggest deals by a foreign company in China, easing concerns that regulators are on a protectionist bent.

India suspends further opening of retail market. Bowing to intense domestic pressure, India's government has suspended a controversial decision - pushed by PM Manmohan Singh - that would have allowed Wal-Mart (WMT) and other foreign companies to own supermarkets in the country.

Berkshire Hathaway unit to buy solar farm. MidAmerican Energy Holdings, a unit of Berkshire Hathaway (BRK.A), has agreed to buy First Solar's (FSLR) 550-megawatt Topaz Solar Farm in California. There is no word on the price tag, although the plant, which will be one of the largest ever, is expected to cost more than $2B to build.

Boeing, employees hope for calmer skies. Boeing's (BA) machinists union is due to vote today on a four-year contract extension that both sides hope will lead to more harmonious relations after years of rancor. Frost & Sullivan analyst Wayne Plucker said defense cuts and the intensifying competition with Airbus (EADSF.PK) make good labor relations "pivotal."

Sanofi insulin drug raises cancer risk, study shows. Sanofi's (SNY) Lantus, the world’s leading insulin drug with annual sales of $4.7B, almost triples the risk of developing cancer among diabetics, a Swedish study shows. Sanofi dismissed the research as being flawed and too small.

ING to take €1B charge on U.S. insurance ops. ING (ING) will take a charge of between €900M ($1.2B) and €1.1B on its U.S. insurance business in connection with its closed block of variable annuity policies. The Dutch bank said certain policyholder behavior had diverged from earlier assumptions it had made. Shares -1.9% premarket.

Today's Markets:
In Asia, Japan +1.7% to 8722. Hong Kong +1.6% to 19241. China +0.3% to 2333. India +0.4% to 16877.
In Europe, at midday, London +0.2%. Paris +0.5%. Frankfurt +0.5%.
Futures at 7:15: Dow +0.4%. S&P +0.4%. Nasdaq +0.3%. Crude flat at $101.31. Gold -0.1% to $1730.40.

Wednesday's economic calendar:
7:00 MBA Mortgage Applications
10:00 Quarterly Services Report
10:30 EIA Petroleum Inventories
3:00 PM Consumer Credit

Earnings Results: Companies that beat EPS expectations last night and today include Men's Wearhouse ([[MW]]).

For full real-time earnings coverage, please click here.

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Merkozy seek to resolve differences. Nicolas Sarkozy and Angela Merkel are due to meet for lunch in Paris today as they look to overcome their differences on closer fiscal integration ahead of yet another EU summit on Friday. The problem, argues Ambrose Evans-Pritchard, is that while Merkel insists on increased power to police the budgets of sinner states, she offers precious little in return. In the end, "we may just have to...wait for Germany to blink at last, or detonate the fuse," Evans-Pritchard writes.

SAP flies further into the cloud with $3.4B deal. SAP (SAP) is to buy SuccessFactors (SFSF), a provider of online HR software, for $3.4B. The price of $40 a share represents a 52% premium to SuccessFactors' Friday close. The acquisition comes six weeks after Oracle's (ORCL) deal to purchase cloud customer support firm RightNow (RNOW), and a month after SAP said it was forming a plan to expand its cloud offerings.

Commercial Metals spurns $1.73B Icahn offer. Commercial Metals (CMC) has rejected an unsolicited $1.73B bid from Carl Icahn, saying that the $15 a share offer is opportunistic and fails to reflect CMC's true value. Icahn's company said it would "take matters into our own hands" if CMC failed to respond by today.

Are we nearing the end of parsing Fedspeak? The Fed is preparing a new system for signaling its policy plans to the public, with the dual goal of being more explicit about its inflation and employment targets, and being clearer about its interest-rate strategy to meet those goals. Officials hope to roll out the plan early next year.

MF Global used customer money for longer than thought. MF Global (MFGLQ.PK) had been using client cash for "several days if not weeks" before its bankruptcy rather than, as previously thought, just a few days prior, Reuters reports. If true, it would pose the question of why CME (CME) reviewed MF's books a week before the bankruptcy and found no problems.

GM acknowledges Opel failure. GM (GM) Vice Chairman Steve Girsky has admitted that Opel's turnaround strategy has been a failure, saying that "our plan for making Opel profitable this year did not work."

Olympus hid $1.67B of losses. An investigative panel has found that Japan's Olympus (OCPNY.PK) hid up to $1.67B in losses from investors, Reuters reports, but it will probably say there is no proof of a much-rumored link with Japan's "yakuza" gangsters. The panel will also stop short of recommending criminal charges against executives. The report is due to be released as soon as tomorrow.

Unreliable forecasts cause corn market volatility. Corn futures were +0.25% premarket, a relatively small bump that doesn't reflect the recent volatility in the commodity's price. According to a Wall Street Journal analysis, increasingly unreliable government reports are partly to blame for the gyrations, with officials saying unpredictable weather has made forecasting difficult.

Companies could face massive fines under EU privacy rules. Large multinational corporations could be fined billions of dollars under potential EU privacy rules that would penalize firms up to 5% of their overall revenue for mishandling customer, supplier or employee data, The Financial Times reports. The Commission is drawing up the rules, although Germany could be reluctant to lose oversight on privacy matters to Brussels.

ETF pioneer puts company on block for $1.6B. Graham Tuckwell, who created the first ETFs for gold and oil, is looking to sell his company, ETF Securities, for a potential price of £1B ($1.6B), The Financial Times reports. Tuckwell's decision comes as money pours into gold ETFs and scrutiny increases on the market for the funds.

SEC probes Marlins stadium bonds. The SEC is investigating nearly $500M in municipal bonds sold to fund the Miami Marlins' new ballpark and another related deal, and has requested information from the city of Miami and Miami-Dade County. The probe may focus on the Marlins' claims that it needed help because it could not afford to pay for the stadium.

Shell, Qatar to develop $6.4B petrochemicals plant. Shell (RDS.A) and Qatar Petroleum yesterday signed a heads of agreement to build a $6.4B petrochemicals plant in the Gulf country, with the latter to take an 80% stake in the project and Shell the rest. The companies hope to sign a final JV pact by the end of next year or early 2013, and complete the facility in 2017.

Reports of S&P's lost decade greatly exaggerated. Although the S&P 500 has dropped 19% since the technology bubble burst in 2000, the benchmark index has jumped 66% when excluding adjustments for market capitalizations, which gives equal credit to Exxon (XOM), which is worth $382.5B, and Monster (MWW), whose value is $945.6M. "Corporate America repaired itself," says U.S. Trust's Chris Hyzy. "On an equal-weighted basis, it hasn’t been a lost decade."

Today's Markets:
In Asia, Japan +0.6% to 8696. Hong Kong +0.7% to 19180. China -1.2% to 2333. India -0.3% to 16805.
In Europe, at midday, London +0.5%. Paris +1.4%. Frankfurt +0.6%.
Futures at 7:00: Dow +0.9%. S&P +1%. Nasdaq +0.8%. Crude +0.5% to $101.46. Gold -0.45% to $1743.40.

Monday's economic calendar:
10:00 Factory Orders
10:00 Employment Trends Index
10:00 ISM Non-Manufacturing Index
1:10 PM Fed's Evans: Economic Outlook

Earnings Results: Companies that beat EPS expectations today include Dollar General (DG). For full real-time earnings coverage, please click here.

Notable earnings before Monday's open: DG

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RIM to take $458M PlayBook provision. Research In Motion (RIMM) will take a $485M pretax provision in relation to its PlayBook and now expects FQ3 revenue to be slightly lower than the previous range of $5.3B-5.6B. EPS will come in at the low to mid-point of RIM's prior prediction of $1.20-$1.40. For FQ4, RIM said that lower shipments will hurt its outlook, while it no longer expects to meet its full-year EPS guidance of $5.25-$6.00. Shares have been halted in premarket trading.

Has Merkel opened the door for stronger ECB action? Angela Merkel today called for the credibility of the ECB to be protected, but interestingly said that "In future, I will not comment on what...national central banks or the European Central Bank do or don't do." Is that the slightest hint that Merkel will drop her opposition to hitherto verboten ECB action? Echoing Nicolas Sarkozy yesterday, Merkel also said the EU's goal is fiscal union that enforces discipline and has the "necessary instruments" to allow policy coordination.

China won't come to eurozone's rescue. "The idea that China should save Europe does not stand," Chinese Vice Foreign Minister Fu Ying said today, providing one of the country's strongest rebuttals yet that it should use its $3.2T forex reserves for this purpose. Fu pointed out that the government also "cannot use this money domestically to alleviate poverty."

EU Commission to throw book at Google. The EU Commission is expected to issue early next year a statement of objections that will be over 400 pages long and will detail the bevy of allegations against Google (GOOG) about the abuse of its dominance, the dealReporter writes. Google faces a fine of up to 10% of its annual turnover if found guilty.

Western Digital restarts Thai output. Western Digital (WDC) has joined rival Seagate (STX) in signalling a recovery from the Thai floods, saying that it has restarted the output of hard disk drives in the country and that it is raising its FQ2 revenue outlook to at least $1.8B. That's above Street forecasts and prior guidance. WDC is also upbeat on margins but expects to take a charge of $225M-$275M, excluding any insurance recovery.

Jobs growth expected to have accelerated. Employment data is due out this morning, with economists expecting that the growth in nonfarm payrolls accelerated to 125,000 in November from 80,000 in October, although that is unlikely have been enough to bring down the jobless rate from 9%. That would mean that unemployment would have been above 8% since February 2009, the longest stretch since monthly records began in 1948.

Railways and unions on track to avoid strike. Major railway companies, including CSX (CSX) and Union Pacific (UNP), appear to have avoided a damaging pre-Christmas strike of almost 50,000 workers next week after reaching tentative labor deals with two big unions. A third union, the last of 13 without an agreement, has extended the deadline for a deal by two months. The agreements come as rail traffic continues to chug along nicely.

Brokerages face new rules following MF's collapse. Regulators are considering new rules for brokerages following MF Global’s (MFGLQ.PK) collapse, with the CFTC due to vote next week on restricting the use of customer money and the SEC looking to enforce greater accounting disclosures. The CFTC had wanted to complete the rules regarding client cash early in the year, but delayed the changes amid robust lobbying from...Jon Corzine.

Thomson Reuters replaces CEO. Thomson Reuters (TRI) is replacing CEO Tom Glocer with COO James Smith following a slump in its share price. The change is the latest management shakeup at the news and information company as it seeks to turn around the disappointing performance of its financial data business amid a weakening economy and strong competition, particularly from Bloomberg.

EA getting serious about casual gaming. Electronic Arts (ERTS) continues to expand its casual gaming arsenal as it looks to challenge Zynga, with EA saying it is acquiring KlickNation, a developer of social role-playing games. EA's move follows its purchase of mobile games developer PopCap and the release of a Facebook title for its popular Sims franchise.

Senate blocks payroll tax relief bills. The Senate last night blocked Democrat and GOP bills to extend the payroll tax relief, although this could apparently open the door for a broader deal that could also include Republican ideas for offsetting the revenue losses and Democrat demands to extend unemployment benefits. Economists reckon that letting the tax cut expire could reduce growth by 0.5%-1% and cost 400K-1M by the end of 2012, but many Republicans are unconvinced.

Today's Markets:
In Asia, Japan +0.5% to 8644. Hong Kong +0.2% to 19040. China -1.1% to 2361. India +2.2% to 16847.
In Europe, at midday, London +1.5%. Paris +1.6%. Frankfurt +1.7%.
Futures at 7:00: Dow +1.1%. S&P +1.1%. Nasdaq +1.2%. Crude +1% to $101.18. Gold +1% to $1756.50.

Friday's economic calendar:
Monster Employment Index
8:30 Nonfarm Payrolls
9:00 Fed's Fisher: 'America's Fiscal Challenges'
10:00 Fed's Plosser: Debt and Monetary Policy

Earnings Results: Companies that beat EPS expectations last night and today include PVH (PVH), Avago Technologies (AVGO), Zumiez (ZUMZ).

Those that missed forecasts include H&R Block (HRB).

For full real-time earnings coverage, please click here.

Notable earnings before Friday's open: [[BIG]], [[BNS]]

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