The pan-European Dow Jones Stoxx 600 index (ST:SXXP: news , chart , profile ) pared strong gains from Friday, dropping 1.7% to 192.55.

Of regional equity markets, the U.K. FTSE 100 index (UK:UKX: news , chart , profile ) fell 1.5% to 4,093.27, the German DAX 30 index (DX:1876534: news , chart , profile ) lost 2.1% to 4,576.42 and the French CAC-40 index (FR:1804546: news , chart , profile ) fell 1.9% to 3,043.35.

Asian shares were mixed, while U.S. futures were lower, with Dow Jones Industrial Average futures down 150 points. Read more on Asia markets.

The losses came after a deadly outbreak of swine flu that has killed people in Mexico, following similar cases in Texas, California and Kansas.

The World Health Organization Saturday declared the outbreak of the previously unknown virus "a public health emergency of international concern."

Dr. Margaret Chan, the agency's director-general, told reporters that the outbreak has "pandemic potential." See full story.

Airlines shares fell on Monday in Europe, with British Airways (UK:BAY: news , chart , profile ) down 11.4%, Air France-KLM (FR:AF: news , chart , profile ) down 9.5, Iberia (ES:IBLA: news , chart , profile ) shares down 7.2% and Deutsche Lufthansa (DE:LHA: news , chart , profile ) shares 6.2%.

Hotel operators and travel companies were pressured, with Accor (FR:AC: news , chart , profile ) shares down 6.4% in Paris, InterContinental (UK:IHG: news , chart , profile ) shares down 5.4% in London and cruise operator Carnival (UK:CCL: news , chart , profile ) down 7.7%, also in London.

Still, drug companies were doing well, with influenza vaccine makers Roche Holding (CH:ROG: news , chart , profile ) , Sanofi-Aventis (FR:SAN: news , chart , profile ) and GlaxoSmithKline (UK:GSK: news , chart , profile ) , up by between 1.8% to 4.5%.

Merck KGaA (DE:MRK: news , chart , profile ) rose 2.7% after it reported a 76.4% drop in first-quarter net profit to 56.7 million euros, that nonetheless broadly matched forecasts.

Banks were the worst performers by contribution on the Stoxx 600, following a strong session on Friday, with shares of HSBC Holdings (UK:HSBA: news , chart , profile ) down 3.4%.

Shares of French bank Societe Generale (FR:GLE: news , chart , profile ) lost 3.2%. On Monday, the lender denied a report in the Liberation newspaper that its alternative investment business had lost between 5 billion euros ($6.6 billion) and 10 billion euros from investments in risky assets.

Shares of Fortis (BE:FORB: news , chart , profile ) lost 6% in Brussels.

Ping An Insurance (Group) Co. of China, which owns nearly 5% of Fortis, has said it plans to vote against the Belgian-Dutch financial company's proposed acquisition by BNP Paribas (FR:BNP: news , chart , profile ) , according to media reports. BNP Paribas shares lost 1.8%.

Europe Markets: Shares in Europe fall as influenza fears hit

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Officials in Australia say more young foreigners looking to escape recession in other parts of the world could be heading for the country this year on working holidays. The number of skilled travelers from Britain and Germany applying for working holiday visas is up sharply from last year. Australia has always been a backpacker's delight, a vast island that's relatively inexpensive and safe that offers them the chance to work for up to two years. While the country has not avoided the global credit meltdown, Australia is increasingly becoming a haven for young foreign travelers looking to strengthen their resumes and escape economic problems back home.Applications from British and German travelers for working holiday visas are up by 20 percent.Australia tourism booth during the Matta Travel Fair in Kuala Lumpur, Malaysia,14 Mar 2009A 21-year-old backpacker from England who identified herself only as Rachel, says she is looking for work in Sydney but is concerned about those she has left behind."Speaking to people and friends back home there is always the constant worry that they are going to be made redundant, she said. "I am also trying to decide whether to stay here for a year rather than three months that I initially planned to because I just do not see that there is that many prospects back at home."  Australia's economy is declining, and with unemployment rising, finding a job is likely to be increasingly difficult for international backpackers.Patricia Forsyth from the Sydney Chamber of Commerce says young travelers will have to be patient.

"I cannot pretend that it will be easy for people to be able to get jobs but I think you would need to come in prepared to hunt for work," said Forsyth. "It is not going to be on a plate and handed to you as it might have been 12 months or more ago."Australia's working holiday scheme is open to travelers between the ages of 18 and 30 from a range of countries, including Canada, Britain, Sweden and South Korea.Work permits are valid for 12 months but can be extended up to two years if participants agree to work on a farm - an attempt to help Australia's agricultural sector which often has trouble finding enough laborers. 

Foreign Backpackers Flock to Australia to Escape Global Recession

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WASHINGTON (Reuters) – Switzerland, under pressure to join a global crackdown on tax fraud, asked the United States Saturday to drop a legal case involving UBS bank in return for a new tax accord the two countries are about to negotiate.

UBS agreed recently to pay a &&6;780 million fine and disclose the identity of about 300 of its U.S. clients to avert criminal charges but U.S. authorities are still pursuing it, seeking to access the data of another 52,000 Americans they say are hiding about &&6;14.8 billion in assets in Swiss bank accounts.

Swiss President Hans-Rudolf Merz, whose country is famous for strict bank secrecy, told a news conference U.S. Treasury Secretary Timothy Geithner seemed sympathetic to his call, put to Geithner at a meeting in Washington.

The two sides start talks Tuesday on a new bilateral tax treaty and Merz said he hoped the negotiations would move swiftly.

Any such accord needed to be adopted by lawmakers in both countries, though, and perhaps put to referendum in Switzerland, where it could stumble if the U.S. tax evasion case was still hanging over UBS (UBSN.VX) (UBS.N), Merz said.

"I think Mr. Geithner is conscious of the fact that these criminal procedures that are taking place in the United States could be an obstacle to the political process of the double taxation accords," Merz said.

"This is why I proposed that the criminal proceedings be withdrawn at the time of signing of such an accord."

The U.S. authorities arrested and charged an accountant in Florida on April 2 in the first of what they said could be a series of tax evasion prosecutions of American clients of UBS.

Merz said this move, which came just as Switzerland had said it was ready to negotiate a new tax accord with Washington, had been "harmful to Switzerland and UBS."

Geithner, met on the sidelines of the International Monetary Fund&&9;s semi-annual meetings, said he would consider the Swiss request but could not reply immediately, Merz said.

The U.S. Treasury Department did not respond to a request for comment.

GERMAN DETENTE NOT EASY

Under international pressure, Switzerland announced earlier this month that it would move toward internationally accepted standards of bank information disclosure in tax fraud cases.

Merz, who is also his country&&9;s finance minister, said that renegotiation of tax accords with the United States, Japan and Poland were already earmarked as priorities.

Similar moves could start with European countries too.

Asked about Germany, which has been particularly critical of Switzerland, Merz said it was crucial to reach a solution with Berlin but suggested it would not be simple.

"When there have been psychological and political problems, it is not our fault," he said. "We have not polemicised in any way. But the German side, namely the finance minister, has been very heavily polemical."

He said the air had to be cleared first but German Finance Minister Peer Steinbrueck had not come to Washington for the IMF meetings.

"We will have to catch up when the opportunity comes up," he said. "I think we will now concentrate on countries with whom we could come to a quick solution."

Switzerland announced in March that it would start moving toward standards of bank information disclosure established by the Organization for Economic Co-operation and Development, something it has steadfastly refused to do before.

Like many other offshore financial centres and tax havens, it has come under intensifying pressure from governments keen to root out tax dodgers at a time when the global economic crisis is shrinking their revenues and forcing expenditure sky-high.

(Additional reporting by Gernot Heller; Editing by Andrea Ricci)

Swiss ask U.S. to drop UBS tax evasion case

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WASHINGTON (Reuters) – U.S. bank regulators on Friday closed four banks and one credit union as the recession took its toll on financial institutions.

"The FDIC has been consistent in our public statements that there will be an increase in activity in bank failures over the course of this year and the announcements tonight reflect that," Federal Deposit Insurance Corp spokesman Andrew Gray said.

Officials have seized 29 banks so far this year. That is up from 25 U.S. banks in all of 2008 and three in 2007.

"There&&9;s been little to no disruption for insured depositors," Gray said, declining to estimate how many more bank failures loom.

FDIC and the National Credit Union Administration announced the closings of:

* Eastern Financial Florida Credit Union, headquartered in Miramar, Florida. The National Credit Union Administration was appointed conservator by the Florida Office of Financial Regulations.

The credit union has about &&6;1.6 billion in assets and about 200,000 members. Space Coast Credit Union of Melbourne, Florida, will temporarily manage operations.

* First Bank of Beverly Hills in Calabasas, California. The bank had about &&6;1.5 billion in assets and &&6;1 billion in deposits. FDIC said it had approved the payout of insured deposits. The California Department of Financial Institutions appointed the FDIC as the receiver. The failure is expected to cost the FDIC insurance fund about &&6;394 million.

* First Bank of Idaho in Ketchum. It had about &&6;488.9 million in assets and &&6;374 million in deposits. The failure is expected to cost the FDIC insurance fund about &&6;191.2 million.

FDIC was appointed the receiver. The agency said the U.S. Bank, Minneapolis, Minnesota would assume all of the deposits, excluding &&6;112.8 million in brokered deposits held by First Bank of Idaho, which had seven offices in Idaho and Wyoming.

* Michigan Heritage Bank of Farmington Hills, Michigan. With about &&6;184.6 million in assets and &&6;151.7 million in deposits, FDIC said Level One Bank of Farmington Hills would assume the closed bank&&9;s deposits.

The failure is expected to cost the FDIC insurance fund about &&6;71.3 million.

* American Southern Bank of Kennesaw, Georgia. Bank of North Georgia of Alpharetta, Georgia, will assume its deposits. American Southern had about &&6;112.3 million in total assets and total deposits of &&6;104.3 million. The failure is expected to cost the FDIC insurance fund &&6;41.9 million.

The FDIC will insure up to &&6;250,000 per account through 2009 and in individual retirement accounts at insured banks.

The agency has a running tally of problem banks that its examiners closely monitor. At the end of the fourth quarter, 252 undisclosed institutions were on that list.

(Reporting by Richard Cowan, editing by Leslie Gevirtz)

U.S. regulators close 4 banks and a credit union

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The Munich-based Ifo Institute's business climate index rose to 83.7 from a revised 82.2 in March and exceeded the consensus estimate for a rise to 82.3. The March reading was the lowest since records began in 1991.

The data lifted the euro and European shares. The single currency was 0.7% higher at $1.3225 versus the dollar in recent action, a gain of 0.7%. Germany's Dax index was 1.2% higher. See Europe Markets.

The rise reinforces the rebound posted by the April euro-zone purchasing managers indexes on Thursday, which indicated that the pace of the sharp decline in output across the euro-zone's manufacturing and services sectors was beginning to moderate. See full story.

"We still expect German [gross domestic product] to fall by a whopping 6% this year as a whole, partly reflecting a very weak starting point," said Jennifer McKeown, European economist at Capital Economics. "But the improvement in (Ifo) business sentiment is an encouraging sign that things should get better as the year goes on."

The Ifo index is based on survey of 7,000 firms across the euro-zone's biggest economy. The Ifo business index measuring expectations over the next six months rose to 83.9 from 81.6, reports said, while the current conditions index increased to 83.6 from 82.7.

Meanwhile, Spain's statistical agency reported Friday that the country saw unemployment jump to 17.4% in the first quarter of 2009, bringing the total number of unemployed to more than 4 million.

In the fourth quarter of last year, Spain recorded an unemployment rate of 13.9%. In the last 12 months, the number of unemployed increased by 1,836,600 persons. Many economists expect Spain's unemployment will top 20% by next year

Economic Report: German business climate up from historic low

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TURIN, Italy &<51; Fiat, the Italian automaker, is considering an acquisition of General Motors&S217; Opel division in Europe, and has discussed a potential deal with government negotiators in Washington, executives at G.M. and representatives of the German government, according to several officials involved in the talks.

Fiat is already in advanced talks to acquire a 20 percent stake in Chrysler. A deal for Opel would solidify its position in Europe while sharply increasing its current production of 2.2 million vehicles a year, a longtime goal of Fiat&S217;s chief executive, Sergio Marchionne.

&S220;There are, in contrast to earlier assertions, interested private investors, and a number of them at that,&S221; said Roland Koch, governor of the German state of Hesse, where Opel has its headquarters. &S220;It is a good thing for the future of Opel that there is competition for the company. Magna and Fiat are two of the possible partners. But it is clear that there are no decisions yet.&S221;

Magna is a Canadian auto parts supplier.

Carter Dougherty contributed reporting.

Fiat Weighs Buying G.M.’s Opel Unit, Officials Say

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NEW YORK (Reuters) – The Dow and S&P fell on Wednesday after Morgan Stanley revived concerns about the banking sector and the wider economy after it posted its second straight quarterly loss and slashed its dividend.

The Nasdaq, however, eked out a gain after AT&T (T.N) reported a profit that fell less than expected, and an analyst said its iPhone partnership with Apple Inc (AAPL.O) is starting to help rather than hurt profits, lifting tech shares.

The market, which had been up much of the day as investors initially seized on company comments suggesting that corporate profits were stabilizing, has been sensitive to the outlook for banks ahead of the government&&9;s "stress test" results expected in the days ahead.

Morgan Stanley (MS.N) slid 9 percent to &&6;22.44 after it posted its third loss in six quarters on real estate losses and a charge wiped out fees and trading profits. The KBW Bank Index (.BKX) fell 4.9 percent.

Banks have been a key component in leading the six-week rally that drove the broad S&P 500 up nearly 25 percent from March&&9;s bear market lows.

"The financial sector is still heavily influencing the tone and direction of this market," said Keith Wirtz, president and chief investment officer of Fifth Third Asset Management in Cincinnati.

"Equities are just captive to anything that is coming out of financials and today, it was about Morgan Stanley."

The Dow Jones industrial average (.DJI) dropped 82.99 points, or 1.04 percent, to 7,886.57. The Standard & Poor&&9;s 500 Index (.SPX) slid 6.53 points, or 0.77 percent, to 843.55. The Nasdaq Composite Index (.IXIC) gained 2.27 points, or 0.14 percent, to 1,646.12.

Before the sell-off in the last hour, the stock indexes had been driven higher by brighter outlooks from companies reporting quarterly results.

JPMorgan recommended that Caterpillar should make up a larger part of investors&&9; portfolios, and Caterpillar&&9;s stock rose 3.4 percent to &&6;32.45, making it the Dow&&9;s biggest advancer.

AT&T (T.N) was up 1.8 percent at &&6;25.74 after profit fell less than expected, and an analyst said its iPhone partnership with Apple Inc (AAPL.O) is starting to help rather than hurt profits.

Gilead Sciences Inc (GILD.O) jumped 5.7 percent to &&6;46.22 and contributed the most to the Nasdaq&&9;s gain after its quarterly profit beat estimates on increased sales of its drugs to treat the virus that causes AIDS.

Semiconductor stocks were a bright spot following strong quarterly results from SanDisk Corp (SNDK.O). The PHLX Semiconductor index (.SOXX) advanced 4.3 percent.

Boeing Co (BA.N) rose 1.8 percent to &&6;37.30 after the big U.S. aircraft maker and defense contractor lowered its full-year outlook, but the range was still above Wall Street&&9;s expectations, according to Reuters Estimates.

Trading was active on the New York Stock Exchange, with about 1.77 billion shares changing hands, above last year&&9;s estimated daily average of 1.49 billion, while on Nasdaq, about 2.66 billion shares traded, above last year&&9;s daily average of 2.28 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 8 to 7, while on the Nasdaq, 14 stocks rose for every 13 that fell.

(Additional reporting by Jennifer Ablan; Editing by Jan Paschal)

Dow, S&P drop as Morgan Stanley renews bank worries

Hot News: Financial Stocks: Morgan Stanley, Wells Fargo key a volatile session

by Xinhua writer Yang Lei

NEW YORK, April 21 (Xinhua) -- Oil prices seem to have lost steam: crude futures tumbled 8.8 percent in New York on Monday, marking the biggest one-day drop since March 2; and the 45.88-U.S.-dollar settlement price hit a new low in more than a month. On Tuesday crude oil edged up just above 46 dollars despite a strong rally in the equity market.

The sharp decline didn't come as a surprise though. As the enthusiasm from an unsustainable stock rally gradually faded away, oil market investors were drawn back to the reality of austere economic conditions and a bleak oil demand outlook.

Oil's Monday drop was largely pushed by a strengthened dollar and the warning of a slow recovery of world economy. The dollar hit a one-month high against a basket of currencies, which limited the appeal of crude futures as a hedge against inflation.

IMF Managing Director Dominique Strauss-Kahn said that the agency will cut global economic forecasts for this year. Last month, the IMF projected a negative growth of between 0.5 percent and 1 percent in 2009, the first contraction in more than 50 years. Strauss-Kahn also expected a recovery to start in the first half of next year.

Meanwhile, a huge slide in the U.S. equity market dampened investors' sentiment and the May contract's expiring on Tuesday added to the volatility of the price.

Since early March, stimulated by the six-week gaining streak in the stock market, oil prices rallied from around 42 dollars to nearly 55 dollars in choppy sessions. The supply-demand fundamentals, however, did not improve in the mean time.

The short-lived optimism vanished after the International Energy Agency (IEA), U.S. Energy Information Administration (EIA) and OPEC rushed to lower the forecasts of this year's world oil demand. Despite the rising U.S. shares, oil prices fluctuated around 50 dollars a barrel last week, demonstrating a lack of sustained support.

The Paris-based IEA said on April 10 that the world oil demand would fall by 2.4 million barrels to 83.4 million per day this year compared with 2008. The report pointed out that fuel consumption has reached the lowest levels since the early 1980s. The IEA also predicted that the world economy and oil demand won't recover until 2010.

A few days later, the EIA lowered its forecast for this year's world oil demand to 84.09 million barrels per day, 180,000 barrels per day fewer than its prior March estimate. And the OPEC also cut further its estimate of this year's oil demand by another 260,000 barrels per day.

There is no sign of revival in the oil consumption in the United States, the world's largest oil consumer. The latest data from the EIA showed that U.S. crude oil inventories reached 366.7 million barrels, the highest level since Sept. 7, 1990. And during the four weeks ending April 10, average fuel demand is 5.2 percent down from one year ago.

Many analysts believe that oil price will remain weak through the summer, the traditional driving season when gasoline consumption peaks in the year.

A research report from Goldman Sachs predicted that the oil price will drop to 45 dollars a barrel shortly. BNP Paribas sees U.S. light crude oil futures down to average just 35 dollars a barrel in the second quarter of 2009, before recovering to 45 dollars in the third quarter and 58 dollars in the fourth. Special Report:Global Financial Crisis

News Analysis: Demand concern cools off oil

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BOSTON/NEW YORK (Reuters) – Bank of New York Mellon Corp (BK.N) and Northern Trust Corp (NTRS.O), two large U.S. custodial banks, reported disappointing profit as declines in client assets depressed fees, while State Street Corp (STT.N) topped forecasts.

Profit attributable to common shareholders fell 64 percent at Northern Trust, 57 percent at Bank of New York Mellon and 16 percent at State Street. Bank of New York Mellon also cut its quarterly dividend by 63 percent, citing a desire to build capital and save &&6;700 million a year.

In afternoon trading, Bank of New York Mellon shares were down 3.9 percent, Northern Trust fell 6.4 percent, and State Street rose 14.4 percent.

"Bank of New York and Northern Trust&&9;s numbers were significantly below expectations," said Gerard Cassidy, an analyst at RBC Capital Markets. "State Street&&9;s net interest margin did not decline as much, and it was more successful reducing operating expenses."

The three companies provide processing and back-office services to institutional clients as custodial banks, and are also large asset managers.

Though their service-driven businesses have been considered relatively stable as mortgage and trading losses have soared at consumer and investment banks, custodial banks are seeing results hurt because of lower business volume.

"Revenue headwinds for the trust banks were much more severe than we had expected, especially in the foreign exchange and securities lending areas," said Murali Gopal, an analyst at Keefe, Bruyette & Woods Inc. "The market is coming to the conclusion that 2009 is going to be a much more challenging year than had been expected."

PROFITS FALL

Bank of New York Mellon&&9;s quarterly profit fell to &&6;322 million, or 28 cents per share, from &&6;746 million, or 65 cents per share, a year earlier.

Excluding items, profit was 53 cents per share, below the average analyst forecast of 63 cents, Reuters Estimates said.

The New York-based bank cut its quarterly dividend to 9 cents per share from 24 cents. Custodial assets fell 16 percent to &&6;19.5 trillion, while assets under management fell 20 percent to &&6;881 billion.

State Street, based in Boston, said profit fell to &&6;445 million, or &&6;1.02 per share, from &&6;530 million, or &&6;1.35.

Operating profit was &&6;1.04 per share, 2 cents more than expected. Expenses fell 26 percent, while unrealized losses on investments and off-balance-sheet commercial paper programs fell to &&6;9.5 billion from &&6;9.9 billion at year-end. Custodial assets fell 24 percent to &&6;11.3 trillion, and assets under management slid 29 percent to &&6;1.4 trillion.

Chicago-based Northern Trust said quarterly profit fell to &&6;138.8 million, or 61 cents per share, from &&6;385.2 million, or &&6;1.71. Analysts expected 96 cents. Custodial assets fell 29 percent to &&6;2.84 trillion, while assets under management fell 33 percent to &&6;522.3 billion.

Bank of New York Mellon has received &&6;3 billion, State Street &&6;2 billion and Northern Trust &&6;1.5 billion of taxpayer funds from the government&&9;s Troubled Asset Relief Program.

(Additional reporting by Joseph A. Giannone and Christian Plumb; editing by John Wallace and Tim Dobbyn)

Custodial banks' profit down

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Kazakh President Nursultan Nazarbayev (L) and Chinese Premier Wen Jiabao at the Boao Forum, 18 Apr 2009Chinese Premier Wen Jiabao has announced a new $10 billion Asian infrastructure investment fund and said China's stimulus package was already paying off. He also called Saturday for a more diversified monetary system and responsible oversight.In his opening remarks at the Boao Forum on Asia, Mr. Wen said the China-ASEAN Fund on Investment Cooperation would support infrastructure development in the region. He cautioned that world economic recovery could be a "long and torturous process" and that "the basic trend of the world economic recession is not reversed."But Mr. Wen stressed the importance of confidence among world leaders, calling it "more valuable than gold" and said that hope was also important, like a "beacon."He said his country's economy is running "better than expected" thanks to the government's $580 billion stimulus plan and attempts to increase domestic demand. He cited a rise in consumer spending, industrial output, and investment, and said 2.7 million jobs had been created in the first quarter of 2009.Only days ago, China announced a sluggish 6.1 percent growth rate in the first quarter, the country's slowest in a decade. At that time, Mr. Wen said China still faced significant challenges due to the decrease in exports. China has been questioning the U.S. financial system and the reliance on the U.S. dollar as the main international currency. In recent months he has expressed concern over the security of Chinese investments held in U.S. dollars. In his opening remarks, he did not mention the United States but again called for diversifying the international monetary system.The Boao Forum brings together leaders from Asia and around the world and aims to promote regional economic integration. The conference is being held in southern China.

Some information for this report was provided by AP and Reuters.

China Announces $10 Billion Asian Infrastructure Investment

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Earlier, the euro had tumbled against the greenback, adding to last week's losses, after the head of the European Central Bank signaled that policy makers are weighing a further rate cut.

The European single currency bought $1.2904, down from $1.2975 earlier, for a loss of more than 1% for the day. It was the first time in five weeks that the euro traded below $1.30.

On a light day for economic releases, the Conference Board said its index of leading economic indicators fell 0.3% in March, slightly worse than forecasts. The private group said the recession may continue through summer.

Currency traders also took note of action in U.S. equity markets, where the benchmark indexes tumbled after six straight weeks of gains. The Dow Jones Industrial Average was recently off more 230 points, or 2.8%, at 7,900. The S&P 500 fell 3.2%.

The greenback and the Japanese yen have tended to benefit from bouts of pessimism over the economy. The U.S. dollar has also maintained a largely inverse relationship with equity markets, rising when shares fall as investors move out of riskier assets. See full story.

But that opposite relationship with stocks may be breaking down somewhat: The dollar had pushed higher last week despite gains in equity markets.

The dollar index , which tracks the greenback against a trade-weighted basket of rival currencies, pushed higher to 86.835, up from 86.424 earlier. It finished last week below 86.00.

Remarks from European Central Bank President Jean-Claude earlier weighed on the euro.

"We have decided already to embark on nonstandard measures to cope with the situation since mid-September 2008," ECB President Jean-Claude Trichet said in an interview with Nikkei, published on the Japanese business daily's Web site in a report dated Monday. See full story.

Trichet also said the central bank's key lending rate could be cut by a 0.25 percentage point at the meeting. That would bring the rate to 1% from 1.25%.

Strategists at Commerzbank said further downside for the euro may prove limited ahead of the release of key economic indicators this week: Tuesday's ZEW index of German investor confidence, Thursday's surveys of euro-zone purchasing managers, and Friday's release of the closely watched Ifo index of German business confidence.

The data "should confirm the view that the medium-term outlook for the economy has stabilized," they wrote.

That would likely mean that any measures that the ECB might take would remain limited to extending the maturity of refinancing operations and broadening the range of collateral eligible to be used in repo transactions, they said.

Accordingly, the Commerzbank strategists played down prospects for a more aggressive strategy of quantitative easing.

Meanwhile, the dollar lost ground against the Japanese currency, trading at 98.33 yen, down 0.7% from Friday.

Strategists at BNP Paribas said the dollar's ability to climb reflects the role of corporate-bond-market flows and predicted it "will remain in demand as corporate-bond markets see further signs of improvement.

"Corporate-bond-market flows had been the dominant contributor to funding the U.S. current-account deficit ahead of the financial crisis in 2007, with most U.S. inflows generated from Europe," they wrote. "The corporate-bond market has rallied and [the euro] turned south (versus the dollar) three weeks ago, exactly at the time when corporate bonds played catch-up with the better equity market outlook."

Also on the move, the British pound fell 1.9% to $1.4527. The euro rose 1% against sterling to a price of 88.89 pence.

The pound rallied during the early part of April but proved unable last week to extend gains above important resistance around the $1.50 level.

Economists at Lloyds TSB said sterling may be seeing some pressure due to expectations that the release of the British government's budget for the current financial year will significantly boost public borrowing.

Currencies: Dollar extends gains vs. most rivals on data, slumping stocks

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A proxy adviser is calling for Bank of America Corp. shareholders to not back a proposal for separate people to serve as the company's chairman and chief executive, saying it is up to the board to determine that.

But at the same time, Egan-Jones Proxy Services said holders should withhold their votes for five of the 18 board nominees, including Chairman and CEO Ken Lewis.

"We believe that this is an excellent example of a case in which there is an inherent potential conflict in having the CEO serve as the chairman of the board," Egan-Jones said in a report ahead of Bank of America's April 29 annual meeting, where the vote will be tallied. "In our opinion the company would have been much better served, had an independent chairman provided oversight with regard to the decisions of the CEO."

Two proxy advisory firms Friday called for opposition to Lewis' re-election as chairman, turning up the heat on the 62-year-old executive as he tries to weather the current crisis. RiskMetrics Group Inc. and Glass Lewis & Co. LLC joined Proxy Governance Inc., another investor adviser, in also asking shareholders to approve a permanent split in the chairman and CEO roles.

But Egan-Jones said Monday the board already has the ability to do that, so no formal rule against one person holding both jobs is needed. Its comments against Lewis, though, show that it thinks a split is called for at Bank of America.

The company struggled last year, getting $45 billion of rescue funds from the federal government as the company reported a quarterly loss for the first time since 1991. But Bank of America on Monday said it first-quarter net income more than tripled, thanks in large part to recently acquired Merrill Lynch, a deal that many criticized both for its price and the potential amount of toxic assets being assumed.

Besides Lewis, Egan-Jones is advocating shareholders withhold votes for lead independent director O. Temple Sloan Jr. and governance committee Chairman Thomas M. Ryan "for failure of the board to protect the interests of the shareholders during the" Merrill takeover. "Critical information regarding huge losses at Merrill Lynch were neither fully determined nor disclosed to the company's shareholders in the rush to get a deal completed."

Egan-Jones also said holders shouldn't back Joseph W. Prueher and Jackie M. Ward, both of whom are directors at four other companies.

Bank of America shares were recently down 8.4% at $9.66 on the quarterly results. The stock has quadrupled the past month from its March low, but through Friday was still down 25% this year.

-Contact: 201-938-5400

Egan-Jones advises owners to withhold vote for B. of A. CEO Lewis

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S&P 500 futures dropped 11.4 points to 855.40 and Nasdaq 100 futures fell 17.5 points to 1,334.50. Dow industrial futures dropped 99 points.

The S&P 500 is up about 30% from its March 6 low, and a recent set of solid results out of the financial sector have helped the market stretch those gains. According to data from Thomson Reuters, 62% of the 52 members of the S&P 500 that have reported first-quarter results beat analyst estimates while 33% have missed.

"Another week, another positive equity performance -- it is almost becoming routine. The growing impression is that the easy part of the rally in equities has arguably occurred and that relatively few have benefited from it," said David Shairp of J.P. Morgan Asset Management in London.

According to a study from The Wall Street Journal using Treasury Department data, the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February than in October.

Drug maker Eli Lilly and toymaker Hasbro also are set to report results, with financials from International Business Machines and Texas Instruments coming after the close.

On the deal front, PepsiCo said it was buying bottlers PepsiAmericas and Pepsi Bottling for about $6 billion in cash and stock, with both firms being offered roughly a 17% premium to Friday's close. The bottlers, both of which are partly held by PepsiCo, said they would evaluate the offers.

Pepsi also reported first-quarter earnings that were roughly steady, at $1.14 billion, which was ahead of market estimates.

GlaxoSmithKline said it paying at least $2.9 billion in cash for skin products firm Stiefel Laboratories, which is partly held by The Blackstone Group .

UBS said it will sell its Brazilian unit UBS Pactual for $2.5 billion to BTG Investment, which is run by Pactual's ex-CEO. That's about the same price that UBS paid to buy the company three years ago.

The economics calendar is on the light side, with leading indicators for March the sole release of note.

International stocks were mixed on Monday, with gains in Asia and declines in Europe. The Nikkei 225 edged up 0.2% in Tokyo as steelmakers advanced, and the Shanghai Composite rose 2.1%.

Banks and metals producers dropped as the pan-European Dow Jones Stoxx 600 fell 2%.

The dollar eased against the Japanese yen and rose against the euro, a move traditionally associated with increased risk aversion. The dollar and the yen tend to benefit when investors exit stocks.

Oil futures slipped nearly $2 a barrel. Haven assets like gold and bonds rose on Monday.

Gold futures rose $5 an ounce, and yields on 10-year Treasury bonds fell 5 basis points to 2.9%. Yields move in the opposite direction to prices.

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The KBW Banking ETF , the exchange-traded fund that acts as a benchmark for the sector, rose 1.4% in early action and helped the broader financials post a roughly 1% gain.

J.P. Morgan Chase's first-quarter profit slipped 10% from the year ago period as credit losses and provisions rose, but the blue-chip bank posted a profit in stock and bond trading -- suggesting that markets, particularly the credit market, are coming back to life, albeit with massive government help.

The company's quarterly performance echoed similar results at Goldman Sachs Group earlier this week, and may bode well for Citigroup , which reports results on Friday, and for Bank of America , which reports April 20.

J.P. Morgan Chase shares added 2%, while fellow blue chips Bank of America and Citigroup shares rose by 1.2% and 4.8%, respectively.

The Financial Select Sector SPDR , which tracks the financial stocks in the S&P 500, added 1%.

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BEIJING, April 14 -- It is reported Monday that Dell will work with China Mobile to offer smartphones.

Dell is reportedly to offer two models in cooperation with China Mobile. The two models, which are currently going through tests, will be based on the Chinese carrier's operating system, known as Open Mobile System (OMS).

Dell, which used to focus on PCs, is now on schedule to enter the smartphone market.

Michael Dell, CEO of the world's No 2 PC maker, said earlier: "In the past three years, Dell has integrated 3G wireless technologies into its laptop products. And we have also entered into agreements with many mobile carriers about netbook devices. Therefore, it is reasonable that we will launch smaller wireless internet devices or smartphones in the near future."

(Source: china.org.cn)

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