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Investors turned to the safety of gold, which hit a record in euro terms in early trade, and to U.S. government bonds after Standard & Poor's put Portugal's credit rating on review for a possible downgrade, saying the country may have to turn to the EU and IMF for funding.

Although Lisbon, much like Ireland earlier, denies Portugal needs aid, markets are already discounting an eventual Portuguese emergency financial rescue.

While rescuing Portugal would be manageable, assistance for Spain would sorely test the European Union's resources, raising deeper questions about the integrity of its 12-year-old currency and possible contagion beyond Europe.

The euro fell to around $1.2969 in early Asia trade, lows not seen since mid-September, and experts said it could fall further unless there was strong action. <FRX/>

"You really need some aggressive action from the authorities in Europe to try and calm nerves and that's really the key at this stage," Greg Gibbs, a strategist at RBS in Sydney, said.

The euro has fallen some 9 percent from a November high around $1.4281 and was down about 7 percent in November, the biggest monthly fall since May.

CHINA DATA

Stock markets have tracked the euro zone's rolling debt crisis closely, and on Wednesday the MSCI index of shares outside of Japan .MIAPJ0000PUS drifted 0.16 percent lower, despite data from China that showed it had revved up production in November more than expected, with the official purchasing managers' index (PMI) rising to a seven-month high.

Shanghai stocks .SSEC were down 0.2 percent in early trade and Japan's Nikkei's share average .N225 also inched lower, brought down by constant concern over Europe's debt problems. The Nikkei fell nearly 2 percent the previous day, pulled down by tumbling China stocks following a liquidity squeeze in the share market. On Wednesday, it was 0.2 percent lower. .T

"Investors were worried over interest hikes in China and the euro zone yesterday and are now waiting for this Friday's U.S. employment figures and Christmas sales figures to trade on," said Fumiyuki Takahashi, equity strategist for Barclays Capital Japan.

Oil was steady near $84 a barrel while cash gold priced in euros hit a record at 1,068.70 euros an ounce, reflecting the worries Europe. <O/R> <GOL/>

(Editing by Alex Richardson)

The findings, which must be revealed in accordance with a deadline set by a wide-ranging rewrite of U.S. financial rules enacted in July, could shed light on who benefited most from central bank's controversial efforts to support financial institutions and credit markets.

The results might also reignite debate about whether some bailouts, such as the support for insurer AIG (AIG.N), were appropriate.

As the financial crisis that began in the summer of 2007 spread beyond the housing sector to the nation's biggest banks, the Fed, under the leadership of Chairman Ben Bernanke, devised increasingly complex facilities to help restore confidence.

Among these were loans to broker-dealers made outside the Fed's usual discount lending window for troubled institutions, which is reserved for deposit-taking commercial banks.

Investors are curious to see how much money the likes of Goldman Sachs (GS.N), Morgan Stanley (MS.N) and Merrill Lynch, now part of Bank of America (BAC.N), took from the central bank.

"I suspect a lot of institutions might have had their hand out," said Kim Rupert, a managing director at Action Economics in San Francisco. "I expect we'll see some fairly significant borrowings from some of the major financial institutions. It will be interesting to see what foreign institutions were very active."

Other key emergency lending measures included an attempt to revive commercial paper markets with funding from the Fed, as well as a program aimed at securitization markets that also tapped central bank money as an incentive for new deals.

CRYPTIC CLARITY

Arguably, the Fed's most contentious and politically costly decision was the rescue of insurance giant American International Group. Criticism of the Fed grew after it emerged that AIG executives were paying themselves multimillion dollar bonuses.

The Fed-sponsored purchase by JPMorgan of troubled investment firm Bear Stearns in March 2008 also drew heavy scrutiny.

That bailout temporarily quelled market fears about contagion, though Lehman Brothers' failure in September of that year touched off the most virulent phase of the crisis.

Questions linger as to why the Fed and U.S. Treasury decided to let Lehman go after they had acted to save Bear Stearns. The Fed has argued it could not extend a loan to Lehman because the firm was insolvent.

Through it all, the Fed was criticized for being too close to the banking sector, while not doing enough to support the broader economy. In recent months the financial sector has recovered smartly but that rebound has failed to translate into a vigorous economic expansion.

The controversy led to efforts, eventually thwarted, to curtail the central bank's regulatory authority and regularly audit its emergency lending. The one-time disclosure emerged as a compromise.

Some analysts worry that despite the broad nature of the data being released, it would be disclosed in such a way as to make it difficult to make immediate sense of the information.

"My sense is they're going to give us the disclosure in the same grotty fashion (as before)," said Christopher Whalen, managing director at Institutional Risk Analytics, a bank research firm. "It's not going to be well organized so you'll have to sort through it."

The Senate Banking Committee is holding a hearing on problems in the mortgage servicing industry and whether they pose a broader risk to the economy or amount to an isolated if nettlesome problem.

The issues facing the still-struggling housing market have been exacerbated by allegations that banks have used "robo-signers" to sign hundreds of foreclosure documents a day without proper legal review.

Regulators have been criticized for not catching the widespread flaws, which have reignited public anger with banks that received billions of dollars in taxpayer aid during the financial crisis.

Federal bank regulators and all 50 state attorneys general are probing Bank of America (BAC.N), JPMorgan (JPM.N), and other major mortgage servicers, many of whom temporarily halted foreclosures to examine their practices, only to then resume them.

These regulators, including Federal Deposit Insurance Corp Chairman Sheila Bair and Federal Reserve Governor Daniel Tarullo, are expected to provide an update on the probe and how big a threat the documentation problems could pose to the banks and housing market recovery.

Representatives from mortgages finance companies Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) have also been summoned to appear.

Fannie Mae and Freddie Mac officials will likely be questioned on their recent decision to resume sales of foreclosed properties.

"I want to hear why they feel that they have corrected policies that have allowed the foreclosures to take place without the rubber stamping and all the excesses that took place in the foreclosure practices," Robert Menendez, chairman of the Senate banking panel's housing subcommittee, told Reuters.

AG PROBE TALKS IN FLORIDA

Much of the action pertaining to foreclosures is taking place outside Washington, with state attorneys general taking a prominent role in investigating the servicing problems.

Officials from Bank of America and JP Morgan Chase have said they would like to have a settlement with states soon, but so far a deal remains elusive and it could be months before one is reached.

The attorneys general are gathering in Florida this week for the winter meeting of their national association. Among their guests will be Elizabeth Warren, President Barack Obama's top adviser on consumer issues.

Warren was scheduled to attend a reception Tuesday night to hear where the attorneys general foreclosure investigation stands and to provide state officials with an update on efforts to stand up the new Consumer Financial Protection Bureau.

Attorneys general and lawmakers have taken aim at the so-called "dual track" practice in which mortgage servicers go ahead with foreclosure proceedings even as they negotiate possible loan modifications aimed at keeping struggling borrowers in their homes. They have derided the process as confusing for borrowers.

Minneapolis Fed President Narayana Kocherlakota said the Fed's controversial bond purchase program was needed given a "troubling" slowdown in U.S. economic growth and too low inflation and employment.

The Fed said earlier this month it would buy $600 billion in Treasury bonds to support a weak economy. Core inflation has averaged well below the Fed's informal target of about 2 percent and the jobless rate remains stubbornly high.

"There are obviously very severe economic and social consequences from this level of unemployment," Bernanke said at Ohio State University. "So getting new jobs, getting unemployment down is of an incredible importance."

The Fed's purchase program has elicited an unusual amount of criticism both at home and abroad, including that it is deliberately pushing down the dollar and fueling asset bubbles. Some U.S. Republicans have warned the policy will lead to runaway inflation.

Jeffrey Lacker, president of the Richmond Federal Reserve Bank and known as an inflation hawk, said the Fed faces a delicate task of timing the eventual withdrawal of easy money to avoid a run-up in inflation, but that he doesn't yet know when that time will be.

"We've increased the monetary base tremendously, and there is a lot of people that just look at that and jump to the conclusion that hyperinflation is a threat," Lacker told a panel in New York.

"I think there's a little bit of overreaction, a little bit of hysteria out there" on inflation.

WORRYING LONG-TERM UNEMPLOYMENT

Bernanke repeated his argument that action was called for even though the economy has been growing for a year and a half, but he steered clear of any direct comments on U.S. monetary policy.

The high share of workers who have been out of work for six months or longer is troubling, he said, because those workers face a particularly high bar to reentering the labor force both because they lose skills and because employers may question their suitability for employment.

Bernanke also said the elevated jobless rate makes businesses and households reluctant to spend because they are uncertain of future income.

Kocherlakota, for his part, told a symposium in St. Paul, Minnesota, that the Fed's decision to buy more longer-term assets should help reduce real interest rates and "lead to less unemployment and upward pressure on prices" albeit only modestly.

Kocherlakota, who next year rotates into a voting seat on the Fed's policy-setting committee, said the purchases are unlikely to fuel future inflation because the central bank has the tools and the commitment to keep inflation low.

Peter Diamond, whose nomination to the Fed's Board of Governors is awaiting Senate approval, told Reuters Insider in an interview that the Fed's plan was an insurance policy at a time the global economy faces risks.

A deal, reported by several media including the New York Times on Tuesday, would give Google an important window into a fast-growing $91 billion local advertising market.

But Google's shares fell 4.5 percent, partly on concern it may shell out too much for a business likely to face increasing competition. Reports of the deal came as the European Union announced plans to investigate Google's search practices.

"Investors think that might be overpaying," Kaufman Brothers analyst Mayuresh Masurekar said of the reported $5 billion-plus deal.

"There are no barriers to entry. There is nothing unique to what they're doing," he said of Groupon, "so there is a risk that Google overpays for Groupon at this point."

But he added that buying Groupon could help Google make further inroads into a local advertising market that analytics firm Borrell Associates estimates will be worth $91.1 billion in 2010.

Groupon sends its members daily e-mails with about 200 discounts for goods and services. The deals are activated only when a minimum number of people agree to make a purchase, giving Groupon clout to negotiate steep group discounts on products and services.

Wedbush Securities analyst Lou Kerner said that daily-deals service dovetails with Google's search advertising business, with both focused on helping merchants acquire customers.

"Google is building a mosaic of marketing solutions for businesses," said Kerner. "So having this kind of flash-sale side of the business, which will all be automated, just makes a ton of sense."

A Google spokesman said the company does not comment on rumor or speculation. A spokeswoman for Groupon declined comment.

A WEB PHENOM

Groupon -- called the fastest-growing Internet start-up in history -- does not disclose financial figures, though analysts estimates for the two-year old company's annual revenue run rate range from $400 million to $600 million.

The company founded by music graduate Andrew Mason, who lives in Chicago with his girlfriend and 20 cats, has been on a tear. Its subscriber base is expected to grow to 25 million in 2011 from 13 million this year.

Its backers include Digital Sky Technologies, which is also invested in Facebook.

"It's been one of the fastest growing companies in history and that growth is going to be accelerated being part of the Google platform," Kerner said.

Obama named Treasury Secretary Tim Geithner and budget director Jack Lew to work with congressional Republicans and Democrats on a deal to prevent broad tax increases from hitting middle-income Americans next year.

The working group will also tackle the issue that most divides the two political parties: what to do about extending tax cuts for the wealthiest Americans.

At their first White House meeting since the November 2 congressional election, Obama and Republicans stuck to their divergent positions but the president said they agreed the issue must be resolved by the end of this year.

"We agreed that there must be some sensible common ground, so I appointed my Treasury Secretary, Tim Geithner, and my budget director, Jack Lew, to work with representatives of both parties to break through this logjam," Obama said.

If no agreement is reached, all tax-paying Americans could see higher bills next year, giving Republicans a chance to score politically by making tax cuts their priority when taking control of the House of Representatives in January.

Finding common ground before then will be tricky.

Chris Van Hollen, a top Democrat in the House of Representatives, said the chamber could vote on Thursday to extend lower tax rates on income levels up to $200,000 for individuals or $250,000 for couples, allowing rates for the wealthiest 2 percent of Americans to rise.

That vote is seen as a gesture to liberal Democrats, who want to go on record opposing an extension for top earners. If the measure passes the House, it will likely die in the Senate, where Democrats would not have the votes to make it law.

Knowing that, the president may have to agree to extend cuts for Americans of all income levels for one to three years -- an onerous option to many Democrats but one that may be the most likely outcome if the two sides agree on anything at all.

But many analysts are not optimistic.

Charlie Smith, chief investment officer at Pittsburgh-based Fort Pitt Capital Group, said there was less than a 50 percent chance that the tax cuts will be extended.

WIDE DIFFERENCES

Obama said he and many Democrats continue to believe it would be "unwise and unfair" to spend $700 billion to extend tax cuts for the wealthiest Americans while also trying to bring down the U.S. deficit.

Republican leaders, emboldened by gains in the elections, argued it would be better for the economy if tax cuts for all Americans were extended.

"Things can change but we are talking about Thursday," Representative Chris Van Hollen, a member of the Democratic leadership, said after meeting with other lawmakers.

Lawmakers are scrambling to reach a deal before the end of the year to delay expiration of tax cuts enacted under former President George W. Bush. Democrats want extension of lower rates for income up to $200,000, while Republicans want lower rates for income above that amount to be extended as well.

Earlier Tuesday, congressional leaders met with President Barack Obama, where they agreed to form a working group to resolve the issue.

"It was very positive in the spirit of moving forward and doing so in a way that helps to create jobs, reduce the deficit and lower taxes for the middle class," House Speaker Nancy Pelosi said after the meeting.

Still, Democrats are divided on strategy.

Heading into a Democratic House leadership meeting to discuss the issue, Representative John Larson said "extension of all the tax cuts in the House is pretty much a non-starter."

Others said there is room for compromise. Representative Richard Neal, who heads a tax subcommittee in the House, said there needed to be a vote on middle-class only, even if it cannot pass the Senate.

"Both sides are probably going to need a vote before they come to some middle ground," Neal said. "Middle ground is not inescapable."

Neal has advocated a compromise where taxes would go up only on income above $500,000. More liberal members, however, may not be enthusiastic about that benchmark.

(Reporting by Kim Dixon; writing by Andy Sullivan; editing by Mohammad Zargham)

Still, a faster-than-expected fall in prices for U.S. single-family homes in September underscored the hurdles remaining for the recovery.

The Conference Board, an industry group, said its index of consumer attitudes increased to 54.1 in November, the strongest since June, from a revised 49.9 in October. Analysts polled by Reuters forecast a reading of 52.6.

Separately, the Institute for Supply Management-Chicago's business barometer rose to 62.5 in November, up from 60.6 in October and above a forecast from economists.

The nation's high unemployment rate has fueled worries about the consumer's ability to spend, although U.S. store chains showed a strong start to the holiday shopping season after last Thursday's Thanksgiving holiday.

The confidence data "backs up what we've been seeing in retail stores, which is that consumers have been spending," said Wayne Kaufman, chief market analyst at John Thomas Financial n New York.

Standard & Poor's/Case-Shiller composite index on Tuesday showed home prices in 20 metropolitan areas declined 0.8 percent in September from August on a seasonally adjusted basis, more than the decline of 0.3 percent expected by economists in a Reuters poll.

Prices rose 0.6 percent from a year earlier, S&P said, but that was slower than the 1.1 percent expected.

"The data confirms what I think a lot of economists suspected, which was that we would see house price weakness again after the expiration of the first-time home-buyer tax credit," said Christopher Low, chief economist at FIN Financial in New York.

In the U.S. markets, lingering worries about euro-zone sovereign debt overshadowed the data, pushing U.S. stocks lower, benchmark 10-year Treasury note prices higher and the dollar up against the euro.

(Additional reporting by Corbett Daly in Washington and Ryan Vlastelica and Emily Flitter in New York; Editing by Padraic Cassidy)

Obama will host Republicans John Boehner, the next Speaker of the House of Representatives, and Mitch McConnell, the party's leader in the Senate, as well as Democrats Nancy Pelosi, the current Speaker, and Harry Reid, the Senate Majority Leader, at 10:30 EST at the White House.

Taxes will be at the top of their agenda.

With a broad victory in November 2 elections behind them, Republicans are eager to force Democrats to agree to extend Bush-era tax cuts for wealthy Americans as well as the middle-class constituency that concerns Obama the most.

Democrats have been in disarray about how to proceed, despite an impending deadline: the tax cuts expire at the end of this year, and Obama is keen to avoid a situation in which American families making less than $250,000 a year face a tax hike on Jan 1.

To prevent that, he may have to agree to extend cuts for Americans of all income levels for one to three years -- an onerous option to many Democrats, but one that may be the most likely outcome if the two sides agree on anything at all.

Obama has said the United States cannot afford to pay the $700 billion it would cost to extend tax cuts for the rich, but he has also signaled a willingness to compromise after the "shellacking" his party received in this month's election.

The White House said a deal was unlikely to be reached at Tuesday's meeting, which Obama said he hoped would jump-start a better relationship between him and the newly empowered Republicans.

"My hope is that tomorrow's meeting will mark a first step toward a new and productive working relationship," Obama said. "Because we now have a shared responsibility to deliver for the American people on the issues that define not only these times but our future -- and I hope we can do that in a cooperative and serious way."

GET THE JOB DONE

Boehner and McConnell, who could become Obama's main adversaries next year, wrote in an opinion piece that their party would insist on extending tax cuts for everyone during the "lame duck" congressional session that ends this year.

Republicans will control the House and have greater strength in the Senate next year.

"If President Obama and Democratic leaders put forward a plan during the lame-duck session to cut spending and stop the tax hikes on all Americans, they can count on a positive response from Republicans," the two men wrote in a Washington Post piece published on Tuesday.

"If the president and Democratic leaders don't act before the end of the year, however, House and Senate Republicans will work to get the job done in the new Congress. But we hope it doesn't come to that."

The Republicans will put that position on the table during the meeting with Obama, which will also be attended by Vice President Joe Biden, Treasury Secretary Tim Geithner, budget director Jack Lew and other congressional leaders.

Obama invited the congressional leaders for a White House dinner earlier this month, but it was put off for scheduling reasons, which some Democrats interpreted as a Republican snub of the president's outstretched hand.

(Additional reporting by Kim Dixon and Thomas Ferraro; editing by Chris Wilson)

Japanese companies cut production for the fifth month and by the biggest margin since February 2009, while South Korea's industrial output fell for the third month in a row, disappointing markets which had bet on a rebound.

In contrast, India asserted itself as a regional standout, reporting on Tuesday that its economy grew 8.9 percent in the past quarter from a year earlier.

Asia's third-largest economy handily beat market forecasts, but it has a long way to go to become a global source of demand that could fill the void left by debt-ridden Europe and the United States, which are struggling to take off.

The fall in Japan's output was expected -- in fact a drop of 1.8 percent was smaller than the forecast 3.3 percent decline -- after a key stimulus measure, incentives for buyers of fuel-efficient cars, expired in September, and exports continued to cool.

The drop, however, cemented expectations that the world's third-largest economy after the United States and China would contract in the final quarter of the year after a stimulus-driven spurt in the third quarter.

South Korea, among the first economies to regain cruising speed after the global recession, is also losing steam, though Seoul still bets on solid export growth next year.

"The inventory rebuilding cycle after the recession has come to an end, and what we're left with is final domestic demand, which isn't doing that well across the globe," said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong.

"We will see some slowdown in G3 economies and Asia next year. With the European situation unraveling, the risks are more conspicuous."

Weak output reports added to the bearish tone in financial markets, with Asian stocks .MIAPJ0000PUS and the euro under pressure from fears that other euro zone nations may be forced to seek help after Ireland's 85 billion euro rescue.

ASIAN ECONOMIES COOLING MORE THAN EXPECTED?

The numbers follow reports from across Asia that showed most economies were losing traction in the third quarter faster than thought as the initial spurt of foreign demand late last year and early in 2010 waned.

Economists had long expected Asia and the world economy would slow in the second half of this year and early in 2011 as the rebuilding of inventories that had been depleted during the recession was drawing to an end and the effects of stimulus packages were wearing off.

But the cool-down came sooner and turned out to be more pronounced than many economists had anticipated. The economies of the Philippines, Thailand and Singapore all contracted in the past quarter, while growth in South Korea, Taiwan and Indonesia slowed markedly.

That leaves China, which slowed only marginally to a 9.6 percent annual clip in the third quarter, and India, as the mainstays of growth in the region.

But stocks finished well off their lows of the day as the dollar retraced some of its earlier gains and energy and financial stocks rallied late in the session.

While stocks tracked movements in the euro on Monday, a strong U.S. jobs report on Friday could bring the focus back to the economy and break the strong tie between U.S. equities and the euro.

The correlation between the euro and stocks has become more pronounced in recent weeks as the euro zone's debt problems resurfaced, with traders selling the euro and stocks together.

"Tell me what the euro's going to do and I'll tell you where the (stock) market is going to go," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

Banks and energy stocks outperformed the wider market as crude oil futures rose 2.3 percent and banks recovered some of their recent losses.

The KBW bank index rose 1 percent, helped by Bank of America (BAC.N) , which climbed 1.5 percent to $11.31, while Exxon Mobil (XOM.N) reversed earlier losses to close up 0.3 percent at $69.45

Light volume added to volatility, and traders turned their attention to technical markers in the absence of more fundamental news. The S&P 500 bounced off its 50-day moving average, preserving the lower end of its recent trading range.

In the wake of a stronger-than-expected start to the holiday shopping season, investors took profits on a two-week rally in retail stocks. The S&P retail index .RLX fell 0.7 percent.

The Dow Jones industrial average .DJI dropped 39.51 points, or 0.36 percent, to 11,052.49. The Standard & Poor's 500 Index .SPX fell 1.64 points, or 0.14 percent, to 1,187.76. The Nasdaq Composite Index .IXIC lost 9.34 points, or 0.37 percent, to 2,525.22.

European Union finance ministers endorsed an 85 billion euro loan package to help Ireland bridge its deficit, but investors worried how the 16-nation bloc might handle a wider crisis involving Spain and Portugal.

The CBOE Volatility index .VIX, known as Wall Street's fear gauge, rose 3 percent to hit its highest level since early October, indicating anxiety among investors was increasing.

The 22-day correlation coefficient between the euro and the popularly traded E-Mini S&P futures has risen to 0.54, which shows a meaningful relationship between the two assets compared with an insignificant 0.06 correlation two weeks ago.

The problems in Europe overshadowed signs of improving sentiment among consumers heading into the high-spend holiday season.

The number of shoppers in stores over the long U.S. Thanksgiving holiday weekend rose 8.7 percent compared with 2009, according to a private survey.

Julian Assange declined in an interview with Forbes to identify the bank, but he said that he expected that the disclosures, which follow his group's release of U.S. military and diplomatic documents, would lead to investigations.

"We have one related to a bank coming up, that's a megaleak. It's not as big a scale as the Iraq material, but it's either tens or hundreds of thousands of documents depending on how you define it," Assange said in the interview posted on the Forbes website.

He declined to identify the bank, describing it only as a major U.S. bank that is still in existence.

Asked what he wanted to be the result of the disclosure, he replied: "I'm not sure. It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume."

He compared this release to emails that were unveiled as a result of the collapse of disgraced energy company Enron Corp.

"This will be like that. Yes, there will be some flagrant violations, unethical practices that will be revealed, but it will also be all the supporting decision-making structures and the internal executive ethos ... and that's tremendously valuable," Assange said.

"You could call it the ecosystem of corruption. But it's also all the regular decision making that turns a blind eye to and supports unethical practices: the oversight that's not done, the priorities of executives, how they think they're fulfilling their own self-interest," he said.

Assange also told the magazine that his group has material on many businesses and governments, including in Russia, and that it has some documents on pharmaceutical companies, which he did not identify.

More than 250,000 cables were obtained by the whistle-blower website and given to the New York Times and other media groups, which published stories on Sunday exposing the inner workings of U.S. diplomacy, including candid and embarrassing assessments of world leaders.

Before Sunday, WikiLeaks had made public nearly 500,000 classified U.S. files on the wars in Iraq and Afghanistan.

(Editing by Mohammad Zargham)

Shares of Amazon rose as much as 2.6 percent to an all-time high of $181.84, while smaller rival Overstock.com surged 8.1 percent and Web jeweler Blue Nile gained 5.3 percent on indications of strong traffic to retail sites.

The Monday after the U.S. Thanksgiving holiday was dubbed Cyber Monday five years ago to get consumers to focus on online shopping. But retailers have been increasingly offering online deals on Thanksgiving Day and over the holiday weekend as well.

"I would expect Cyber Monday to be as strong as sales were this weekend," said Maggie Taylor, a senior credit officer with Moody's Investors Service.

Despite competition from other days over the Thanksgiving weekend, Cyber Monday is still a big draw and could generate $900 million to $1 billion in sales, according to Jefferies analyst Youssef Squali.

Last year, Cyber Monday sales were $887 million, according to analytics firm comScore, which plans to release Cyber Monday data on Wednesday. Total 2009 U.S. online sales were $130 billion.

EBay Inc's PayPal unit reported a 21 percent rise in total payment volume on Cyber Monday over last year as of 11 am PST. It said that data point, which measures the total value of goods sold, was 34 percent higher on Cyber Monday than on Black Friday of this year.

Meanwhile, IBM Coremetrics reported that online sales as of 12:00 pm PST rose 15 percent year over year.

"The data does suggest that consumers are spending more time online this year with their spending plans, which would bode well for Amazon," analyst Hamed Khorsand of BWS Financial wrote in a note to investors.

Amazon.com deals included a TomTom portable GPS navigator for $89.99, a discount of 61 percent, a Canon flash memory Camcorder for $229 after a 40 percent discount and Barbie Fashion Fairytale Palace at $64.99 instead of $114.99.

Walmart.com did not indicate how much it had marked down items, but offered a Playstation 3 video game console bundle for $388 and a Philips 22-inch LCD HDTV for $209, among other deals.

For a graph on historical Web sales over the Thanksgiving weekend, click here: r.reuters.com/fuc67q.

WHO WAITED FOR MONDAY?

Consumers headed to stores as well as to their computers this Thanksgiving weekend, with online sales from Thursday through Sunday up 14.4 percent versus the same period last year, according to IBM Coremetrics.

Caris & Co analyst Sandeep Aggarwal said that was encouraging for e-commerce, which in recent years has outperformed brick-and-mortar retail but can still be hit by cautious consumer spending.

The Wal-Mart tie-up will help discount retailer Massmart speed up expansion in sub-Saharan Africa and increase its food retailing business, the South African company's chief executive said on Monday.

The deal will also likely pit Wal-Mart, which has long battled with organized labor in the United States, against South Africa's powerful trade unions, some of which have threatened to strike against the U.S. giant.

Massmart's chief executive, Grant Pattison, said the company would retain its local listing and South African management after the deal. Analysts have said local expertise would be critical to avoid a bruising union fight.

"What isn't going to happen is a bunch of Wal-Mart people around here start running the company," Pattison said on a conference call with reporters.

"South African management will continue to manage the business."

The two companies said in a joint statement Wal-Mart would pay 148 rand for a 51 percent stake in the South African company, which has a presence in 14 countries in Africa. The value of the deal is 16.5 billion rand ($2.3 billion), Massmart executives said.

Massmart shares were up 0.2 percent at 141.99 rand. Wal-Mart's bid, including the price, was first announced in September.

Wal-Mart shares fell 23 cents to $53.51.

NEW BALL GAME

"Owning a majority stake allows them that degree of control that they need at this stage, while it also appeases (Massmart's) shareholders," said Natalie Berg, global research director at Planet Retail, an industry research firm.

"Wal-Mart is not going to be making many changes initially. Even though they are present in 16 countries around the world, ranging from India and Costa Rica, retailing in South Africa is a whole new ball game."

The move also requires Wal-Mart to commit less capital than buying the company outright, while giving it a chance to learn about the African market.

"We probably like this a little better because (Wal-Mart is) getting control, but technically dipping a toe in the water," Edward Jones analyst Matt Arnold, said.

Wal-Mart sees international expansion as an important area for growth, as comparable sales at its U.S. discount stores have fallen in each of the last six quarters.

* European stocks rose in morning trade, in a rollercoaster session as a rescue deal for Ireland failed to dissipate worries that the country's debt crisis could spread to other euro zone economies.

* Germany and France declared that Europe had taken decisive action to save the euro by rescuing Ireland and laying the foundations of a permanent debt resolution system, but investors were not convinced.

* Under pressure to arrest the threat to the currency before markets opened and prevent contagion engulfing Portugal and Spain, EU finance ministers endorsed an 85 billion-euro ($115 billion) loan package on Sunday to help Dublin cover bad bank debts and bridge a huge budget deficit.

* The euro hovered near two-month lows against the dollar on Monday as investors looked past the rescue package to debt problems in other peripheral euro zone economies.

* South Korean President Lee Myung-bak vowed retaliation against any further provocation by the North after it attacked an island last week as anger grew at the government's weak response.

* Geopolitical risks were also fueled by U.S. diplomatic cables released on Sunday in an embarrassing leak that undermines U.S. diplomacy. According to a vast cache of diplomatic cables, Saudi King Abdullah has repeatedly urged the United States to attack Iran's nuclear program.

* U.S. oil major ExxonMobil (XOM.N) and its partners have awarded a contract to oil services firm Schlumberger Ltd (SLB.N) to drill 10 wells in Iraq's West Qurna Phase One oilfield, industry sources familiar with the matter said.

* Wal-Mart (WMT.N) made a $2.3 billion formal bid for control of Massmart (MSMJ.J), giving the world's largest retailer a substantial presence in South Africa and paving the way for further expansion across the fast-growing continent.

* Commodity related shares led U.S. stocks lower on Friday in a shortened post-holiday session as investors unloaded risky assets on worries that euro-zone debt problems may spread.

* The Dow Jones industrial average .DJI dropped 95.28 points, or 0.85 percent, to end at 11,092. The Standard & Poor's 500 .SPX slipped 8.95 points, or 0.75 percent, to 1,189.40. The Nasdaq Composite .IXIC lost 8.56 points, or 0.34 percent, to 2,534.56.

* For the week, the Dow dropped 1 percent and the S&P 500 fell 0.86 percent, but the Nasdaq Composite gained 0.65 percent. U.S. markets were closed on Thursday for Thanksgiving Day.

(Reporting by Blaise Robinson; Editing by Louise Heavens)

Even though European authorities agreed to lend Ireland 85 billion euros ($115 billion) on Sunday in the hope it would assure investors that all European nations can repay their debts, the Asian market was cool to the deal.

The euro fell to a two-month low of $1.3183 as investors worried European authorities might not have the means to rescue all fiscally-poor European nations including Portugal and especially Spain, whose economy is much bigger than Ireland's.

"There are still lingering worries about the rest of the countries, including Portugal and Spain," said Lorraine Tan, the director of Asian equity research at Standard & Poor's.

"It does raise risk worries and there are less people willing to take risk at this stage."

The price action in stock and currency markets said as much.

The euro struggled at $1.3224 in mid-day Asian trade, a good way from a high of $1.3345 struck after the Irish aid was announced.

Nervous investors turned instead to the U.S. dollar, considered a safer asset because it is widely traded. The dollar index .DXY hit a two-month high of 80.652, and rose against the yen to a two-month peak above 84.18 yen.

The overall cautious tone kept Asian stocks vacillating between modest gains and losses.

By mid-day, the MSCI Asian stock index outside Japan .MIAPJ0000PUS was little changed even though U.S. stock futures were buoyant, with S&P 500 futures up 0.5 percent.

Japan's Nikkei .N225 was the region's best performer with a 0.8 percent rise. But traders noted the market was thin, suggesting buyers were prudent nonetheless, especially with tensions on the Korean peninsula still bubbling.

The reaction in the commodity markets were more mixed.

Oil managed to brush aside the firmer dollar to rise past $84 toward a two-week high <O/R> as some thought the Irish deal bode well for energy demand.

Copper prices, an essential ingredient for industrial work, were steady while iron ore prices hovered at 6-1/2-month peaks. Iron ore is needed to make steel and is considered a barometer for the state of economic activity.

Gold, on the other hand, which tends to be in demand when investors shy away from risk, was a shade firmer at $1,363.19.

(Editing by Kim Coghill)

Euro zone ministers -- acting under pressure to prevent the crisis of confidence in the region's finances from engulfing Portugal and Spain -- also backed a long-term mechanism intended to prevent the debt crisis from tearing the zone apart.

Noyer, the first member of the ECB's policy council to speak after euro zone ministers sealed an 85 billion euro ($115 billion) loan package for Ireland on Sunday, said he was confident the deal would bring down Dublin's borrowing costs to more normal levels.

"There is no reason to doubt the recovery plans of the two countries," Noyer said in a speech in Tokyo, referring to Ireland and Greece.

But market reaction showed investors thought the crisis that started with Greece's budget blow-out more than a year ago was far from over.

The euro rose slightly against the dollar in early Asian trading on Monday, but quickly slipped back to two month lows.

"I don't think this is going to be a silver bullet. I think there are still going to be some question marks on Portugal and Spain," said Peter Westaway, chief economist at brokers Nomura.

One of the questions that has been dogging markets for weeks and helped drive Ireland off the cliff was whether and under what circumstances private bondholders could be made to take losses, or "haircuts," on euro zone government debt.

The new European Stability Mechanism outlined on Sunday would make private investors share the pain in the case of a debt default or restructuring, but it would apply only to debt issued after 2013.

Noyer, who is also governor of the Bank of France, said that he believed even then it should remain only a theoretical possibility.

"As far as I'm concerned, I exclude that there will be haircuts in the future. It will be a major objective of all members of EU to do everything necessary to be in a position to fully honor their debts in the future.

European officials have been at pains to play down the links between Ireland and Portugal, widely seen as the next euro zone "domino" at risk. Troubles in Portugal could quickly spill over to Spain because of their close economic ties.

Noyer joined the chorus on Monday, saying Portugal was making good progress in consolidating its public finances.

With anxiety rattling bond markets, the Irish government had been under intense pressure to accept a bailout despite repeatedly saying in recent weeks it did not need one.

"This agreement is necessary for our country and our people. The final agreed program represents the best available deal for Ireland," Irish Prime Minister Brian Cowen said.

The long-stagnant U.S. labor market is perking up again, and November should register another solid round of job gains. At the same time, Ireland's plight has all but engulfed financial markets, just as Greece did in March, raising the specter of a regional domino-effect that might eventually imperil the U.S. recovery.

Disruptions in bank lending during the second quarter dented U.S. business confidence, leading to a summer lull in investment and hiring that many feared might send the country into a renewed slump.

Such a possibility appears to have been averted for now, but inklings of further trouble are not far from the horizon.

A Reuters poll on Wednesday showed that 34 out of 50 analysts surveyed believe Portugal, where unions held a general strike on Wednesday, will be forced to follow Ireland and seek a bailout.

If that occurred, fears could grow about Spain, which has an economy and debt bigger than Greece, Ireland and Portugal combined, according to Deutsche Bank. Investors might begin to worry about the future of the single currency area set up over 11 years ago and regarded a major success in its first decade of existence.

European Union and IMF help for Ireland will not settle concerns about deeper budget problems for the euro zone as a whole. For investors, an upcoming 750 million euro bill sale for Portugal could prove a major short-term test.

"Is there still a contagion effect? You bet," said Andrew Brenner, managing director at Guggenheim Partners in New York. "Is Portugal next? No. Spain is the real issue."

A further worsening of conditions in Europe, in turn, could have major implications for both China, which counts on the continent as a key destination for its exports, and the United States, whose banks have a high exposure to the debt of Europe's major financial institutions.

The European Central Bank will meet this week, but with the growth outlook for the continent mixed, analysts see no appetite for new policy steps. Indeed, talk of an eventual pullback in special liquidity facilities may resurface.

THE REAL THING?

At the very least, the U.S. recovery appears to be on a more solid footing. Weekly claims for jobless benefits have been trending down, sliding sharply to their lowest levels since mid-2008, before the financial crisis intensified.

The Labor Department's monthly tally of employment on Friday is expected to show a gain of 140,000 new positions for November. That's on top of October's surprisingly strong 151,000 increase.

The jobless rate, however, is not expected to budge from around 9.6 percent, where it has been stuck for several months.

"Labor force growth is ... expected to be stronger than normal for a time as many underemployed and discouraged workers start to make their way back," said Aaron Smith, a senior economist at Moody's Analytics in West Chester, Pennsylvania. "Thus net hiring has to pick up substantially before the unemployment rate can fall."

Fears that Europe's debt crisis could spiral out of control have pushed stocks off two-year highs hit earlier this month. Since November 5, the S&P has fallen 3.1 percent after running up 17 percent over the two months before that. At Friday's close, the S&P 500 was down 0.9 percent for the week, almost matching the Dow's 1 percent drop.

However, those fears have been countered by signs of a gathering recovery in the labor market at home. The government's nonfarm payrolls report on Friday is set to be another sign of a turnaround in hiring that could boost stocks through the end of the year.

Anecdotal evidence suggests holiday shopping got off to a good start. The S&P retail index .RLX rose more than 5 percent in the run up to "Black Friday," the day after Thanksgiving, when Americans traditionally take shopping malls by storm.

Retail stocks' gains are a sign of an increasingly bullish view of the U.S. consumer after a string of stronger indicators on jobs, sentiment and spending.

"The consumer is more confident and they are spending a bit more money, and I think retail as a whole is perking up," Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas said, adding that retail stocks "look relatively cheap to us, and I think sales are going to surprise to the upside."

Friday's payrolls report is expected to show the economy added 140,000 jobs in November, according to economists polled by Reuters. If that forecast is met, the jobs data will fit a pattern of growing strength in the labor market.

In October, companies hired at their fastest pace since April, the government's payrolls data showed, while the latest weekly initial claims for unemployment benefits have dropped to their lowest in over two years. November consumer sentiment rose to the highest level since June. October consumer spending also gained.

BLACK FRIDAY ANYTHING BUT BASIC

Early anecdotal evidence from Black Friday suggested shoppers were spending and that discounts were not as deep this year as last, potentially helping to lift retailers' margins as they look for the best holiday season in three years.

Black Friday marks the start of the holiday spending when U.S. retailers traditionally turn a profit, or go into the black for the year.

The National Retail Federation said that nearly 60 million Americans planned to hit the stores over the weekend, while another 78 million might join the crowds of shoppers. The NRF will provide an update later on Sunday.

Retailers on the front lines will publish same-store sales data on Thursday when they will likely comment on the weekend's events.

"It seems the American consumer is back with a vengeance," said Kim Caughey Forrest, a senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. "If we are to believe CEOs of retailers, they feel they can support margins with prices that are attracting consumers."

Shares of Amazon.com (AMZN.O), a favorite online retailer, have run up 12 percent since mid-November, and hit an all-time high of $177.25 in the middle of last week.

Finance ministers from the 16-nation euro zone, anxious to prevent financial market contagion from engulfing Portugal and Spain, met to endorse an emergency loan package to help Dublin cover bad bank debts and bridge a massive budget deficit.

A German government source said the ministers were also discussing Portugal and its possible need of an EU bailout.

Under pressure to take dramatic action to arrest a systemic threat to the euro, the leaders of Germany and France, the EU's two central powers, agreed in principle with top EU officials on the broad lines of a permanent crisis-resolution mechanism.

Crucially, private bond holders would be expected to share the burden of any future sovereign debt restructuring of a euro zone country on a case-by-case basis, the source said.

The heads of the European Commission, the European Central Bank, the European Council and euro zone finance ministers discussed the Franco-German proposal by telephone on Sunday.

All 27 EU finance ministers were expected to endorse the broad outlines of the longer-term plan before markets open in Asia on Monday, the source said.

"You know that we have a very serious situation, we have to do our utmost to protect the foundations of our economic recovery," EU Monetary Affairs Commissioner Olli Rehn told reporters on arrival for the Brussels talks.

He said ministers would go beyond endorsing the EU/IMF aid package for Ireland and "discuss the systemic response to this crisis." But it was unclear how much detail would be announced about a long-term financial safety net.

The lack of detail in an earlier Franco-German deal on a permanent crisis mechanism, agreed last month, and talk of private investors having to take losses, or "haircuts," on the value of sovereign bonds, helped drive Ireland over the cliff.

EU sources said a team of specialists from the Commission, the ECB and the International Monetary Fund had finalized a deal with Irish authorities in Dublin after 10 days of negotiations.

However, some key details, notably the interest rate and the term of the loans, expected to be between three and six years, would be finalized by ministers. French Economy Minister Christine Lagarde said the loans would total 85 billion euros.

"The assistance to Ireland is nearly done," she told reporters. "We just have a little fine-tuning to be done, notably on interest rates."

The EU sources said 35 billion euros was earmarked to help restructure and recapitalize Ireland's shattered banks while 50 billion euros would go to help fill the hole that guaranteeing bank debts has blown in public finances.

CONVINCE MARKETS

The planned sale of the 60 percent interest, which sources previously said was under discussion and which was for a price in line with analysts' estimates, brings to $21 billion the amount that BP has raised, or agreed sales on, in recent months.

BP has said it expects the costs of the Gulf of Mexico oil spill -- the United States' worst ever -- to hit $40 billion and said it would sell assets worth $25-$30 billion by the end of next year to pay for it.

Bridas already owns a 40 percent stake in Pan American Energy, which BP said was Argentina's second-largest producer of oil and gas.

Bridas was owned entirely by the family of Argentine tycoon Carlos Bulgheroni until CNOOC agreed to buy a 50 percent stake for $3.1 billion in March.

The 60 percent stake BP is selling represents reserves of 917 million barrels of oil equivalent (boe) and production of 143,000 boe per day.

The transaction excludes the shares of Pan American's Bolivian unit, BP said.

U.S. oil major Exxon Mobil Corp is seeking to sell its Argentine unit Esso, which controls hundreds of service stations and a refinery, local daily El Cronista reported last month.

(Editing by David Cowell)

Cyber Monday -- a term coined five years ago for the day many people return to work after Thanksgiving and make online gift purchases on their computers -- remains a prime shopping day online. But its novelty has now been partially eclipsed by e-commerce promotions earlier in the season, including on Thanksgiving itself.

Retailers from BestBuy.com to Walmart.com and Staples.com have even opted to offer Cyber Monday deals one day early, on newly coined "Cyber Sunday."

The key is versatility, online experts say, as well as making sure shoppers heading to the Web always find something to inspire them to click on a sale.

John Thompson, senior vice president and general manager of BestBuy.com, said Cyber Monday remains a "really viable marketing concept," but smart retailers must offer choice.

"There's demand out there, but you have consumers spending their time differently," he said. "If you don't have one group that shops early, you'll have those who say 'I'll enjoy my Thanksgiving and those same deals or as-good deals will be there Cyber Monday.'"

Marketing firms say tactics have changed in luring consumers to buy online. Whereas in prior years a full email inbox of online deals awaited those back at work on Monday, the offers now increasingly come on Black Friday if not before.

Disneystore.com, for one, had a "record sales day" on Thanksgiving, according to Jim Fielding, president of Disney Stores.

U.S. online sales were up 33 percent on Thanksgiving this year, according to web analytics firm IBM Coremetrics.

Just as many promotions are sent via email on Black Friday, the day after Thanksgiving, as on Cyber Monday, according to Responsys. And half of retailers planned to send email on Cyber Sunday as well as on Thanksgiving, the interactive marketing firm found.

PayPal, the online payments unit of eBay, said its first holiday spike in payment volume came on November 15. On Black Friday, total payment volume, or the total value of goods sold, rose 27 percent versus last year.

Online deals will continue throughout the holiday season. Amazon.com, the largest online retailer, said its Black Friday deals would last all week, while Target.com and eBay have set up daily deals through December.

BEST DEAL?

Despite the e-commerce selling season that now extends before and after Cyber Monday, the Monday after Thanksgiving is still a prime focus of retailers.

Nine out of ten retailers planned to offer a promotion for Cyber Monday, Shop.org and BIGresearch found in a survey. That was more than the nearly three-quarters of respondents in 2007.

Fears that Europe's debt crisis could spiral out of control have pushed stocks off two-year highs hit earlier this month. Since November 5, the S&P has fallen 3.1 percent after running up 17 percent over the two months before that. At Friday's close, the S&P 500 was down 0.9 percent for the week, almost matching the Dow's 1 percent drop.

However, those fears have been countered by signs of a gathering recovery in the labor market at home. The government's nonfarm payrolls report on Friday is set to be another sign of a turnaround in hiring that could boost stocks through the end of the year.

Anecdotal evidence suggests holiday shopping got off to a good start. The S&P retail index .RLX rose more than 5 percent in the run up to "Black Friday," the day after Thanksgiving, when Americans traditionally take shopping malls by storm.

Retail stocks' gains are a sign of an increasingly bullish view of the U.S. consumer after a string of stronger indicators on jobs, sentiment and spending.

"The consumer is more confident and they are spending a bit more money, and I think retail as a whole is perking up," said Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas, adding that retail stocks "look relatively cheap to us, and I think sales are going to surprise to the upside."

Friday's payrolls report is expected to show the economy added 140,000 jobs in November, according to economists polled by Reuters. If that forecast is met, the jobs data will fit a pattern of growing strength in the labor market.

In October, companies hired at their fastest pace since April, the government's payrolls data showed, while the latest weekly initial claims for unemployment benefits have dropped to their lowest in over two years. November consumer sentiment rose to the highest level since June. October consumer spending also gained.

BLACK FRIDAY ANYTHING BUT BASIC

Early anecdotal evidence from Black Friday suggested shoppers were spending and that discounts were not as deep this year as last, potentially helping to lift retailers' margins as they look for the best holiday season in three years.

Black Friday marks the start of the holiday spending when U.S. retailers traditionally turn a profit, or go into the black for the year.

The National Retail Federation said that nearly 60 million Americans plan to hit the stores over the weekend, while another 78 million might join the crowds of shoppers. The NRF will provide an update on Sunday.

Retailers on the front lines will publish same-store sales data on Thursday when they will likely comment on the weekend's events.

"It seems the American consumer is back with a vengeance," said Kim Caughey Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. "If we are to believe CEOs of retailers, they feel they can support margins with prices that are attracting consumers."

Shares of Amazon.com (AMZN.O), a favorite online retailer, have run up 12 percent since mid-November, and hit an all-time high of $177.25 mid-week.

Tens of thousands of Irish are expected to march in Dublin on Saturday in a union-organized protest against the government's decision to seek aid from the EU and IMF to help it deal with its crumbling banks and gaping budget deficit.

European officials hope the 85 billion euro ($112.7 billion) aid program will help draw a line under the debt crisis which started in Greece and now threatens to engulf countries like Portugal and Spain, the fourth-largest economy in the euro zone.

But market pressures have shown no signs of easing. The euro stumbled to a two-month low against the dollar on Friday and the risk premiums investors demand to buy Irish, Portuguese and Spanish debt instead of German Bunds hovered near record highs.

"The current market environment is so febrile and illiquid that the differences between Portugal and Ireland (or Greece) are quickly overlooked, as markets focus on the possible next stage of contagion," Barclays Capital economist Laurent Fransolet wrote in a research note.

The conditions of Ireland's rescue deal with the European Union and International Monetary Fund are expected to be unveiled on Sunday.

A report late on Friday from state broadcaster RTE said the interest rate on the bailout funds being negotiated with the EU and IMF would be between 6 and 7 percent, at the high end of expectations.

The main opposition party Fine Gael said such a rate would be unacceptably high, potentially creating a new hurdle for the government as it works to complete the rescue and secure passage of its 2011 austerity budget next month with a razor-thin parliamentary majority.

Even before Ireland had begun talks on a rescue, its fragile government led by Prime Minister Brian Cowen had announced plans for a far-reaching four-year austerity program targeting savings of 15 billion euros.

That means significant new cuts mandated by the EU and IMF are unlikely. For now, Ireland appears to have successfully resisted pressure from some euro zone partners for it to raise its ultra-low 12.5 percent corporate tax.

The rescue deal could force senior bondholders in the country's big banks, which face mounting losses due to reckless property lending in the boom years, to shoulder some of the costs of the bailout.

ANGER BUBBLING

The Irish public has stoically borne two years of recession, a relentless surge in unemployment and a program of tax rises and spending cuts, but anger is bubbling over at the new measures and the decision to seek aid -- a move many believe hands over the country's hard-won sovereignty to Brussels.

Unions have called for a march on Saturday to Dublin's General Post Office building, headquarters of a nationalist uprising against British rule in 1916 and a potent symbol of Irish independence.

The biggest demonstration of the crisis so far was in early 2009 and attracted about 100,000 people.

The added shares vaulted GM past Agricultural Bank of China's (601288.SS) $22.1 billion IPO in July and underscored the strong demand for the taxpayer-rescued automaker's stock.

GM said on Friday that underwriters led by Morgan Stanley (MS.N), JPMorgan Chase & Co (JPM.N), Bank of America Merrill Lynch (BAC.N) and Citigroup Inc (C.N), exercised their full option on an additional 71.7 million common shares worth $2.37 billion.

They also exercised an option to purchase 13 million preferred shares for $650 million.

Underwriters had 30 days from the IPO to exercise the options.

GM last week had raised $20.1 billion in an IPO of common and preferred shares in what was the biggest U.S. IPO ever. Without the preferred shares, GM's IPO would have been smaller than China's AgBank.

On November 18, their first day of trading, the shares rose 3.6 percent. They closed on Friday up 33 cents at $33.81, or 2.5 percent above the $33 IPO price.

The U.S. government bailed out GM for $50 billion after the automaker's 2009 bankruptcy.

The IPO caps the first stage of a turnaround that has taken the 102-year-old automaker from near-death to an unlikely Wall Street flotation favorite in 2010.

A successful stock debut may help the Obama administration argue that the controversial taxpayer bailout of GM was worthwhile.

The White House has said U.S. taxpayers are on track to recoup the full investment made by the administration and that it hopes to make substantial progress toward shedding the government's stake entirely by mid-to-late 2012.

The strong response to the stock sale reflects growing investor confidence that GM is moving beyond its unpopular, taxpayer-funded bankruptcy with sharply lower costs and higher profit potential.

The U.S. Treasury remain GM's largest shareholder after the IPO with a third of the shares outstanding.

Barclays Capital, Deutsche Bank, Goldman Sachs, Credit Suisse and Royal Bank of Canada are GM's other major underwriters. Lazard and Boston Consulting Group served as advisers to the Treasury. Evercore Partners advised GM.

In the days before the IPO, the price range and the number of shares, including preferred, were all increased.

GM last week sold 478 million common shares at $33 each, raising $15.77 billion, as well as $4.35 billion in preferred shares, more than the initially planned $4 billion.

(Reporting by Clare Baldwin and Jonathan Spicer; editing by Carol Bishopric and Tim Dobbyn)