Business Blog Posts

SINGAPORE Reuters Asian stocks fell on Wednesday, with Japans big exporters among the heaviest losers as a rise in the yen to a new 15-year high threatens to erode their overseas earnings.

The euro was on the defensive after renewed fears about the euro zone banking system drove it to life lows against the Swiss franc and Australian dollar, hitting financial stocks and dragging equity markets in Europe and the United States lower.

"Its the same old ugly contest -- which currency is the least unattractive," said a dealer at a local bank in Sydney.

Japans Nikkei .N225 fell 2 percent, with the electric equipment, retail trade and motor vehicle sectors the biggest drags on the index.

Exporters Honda Motor 7267.T fell 2.9 percent and chip-tester maker Advantest 6857.T lost 4.2 percent as the yen traded at 83.66, just off a 15-year high hit on Tuesday of 83.51.

"The dollar falling below 84 yen has completely neutralized any positive impetus from the jump in machinery orders," said Masayoshi Okamoto, head of dealing at Jujiya Securities.

MSCIs broadest index of Asian shares outside Japan .MIAPJ0000PUS eased 0.4 percent.

EURO WORRIES

Worries about Europes banks resurfaced on Tuesday, when the Wall Street Journal reported that some major lenders had understated holdings in potentially risky government debt during "stress tests" designed to test their ability to weather crises.

Ireland added to the jittery mood, extending its guarantees for short-term bank liabilities amid fears over the escalating cost of bailing out nationalized lender Anglo Irish ANGIB.UL.

The euro was pinned at $1.2690, having dived from $1.2876 on Tuesday and a three-week high of $1.2920 the day before.

Traders were now looking for a test of support around $1.2625, though they were not keen to go long of the U.S. currency either given concerns about the countrys faltering economic recovery.

The dollar hit a fresh 15-year trough of 83.51 yen before talk of "semi-official" bids and option protection at 83.50 helped it edge up to 83.74.

Analysts at BNY Mellon, who track investor flows in and out of currencies, reported net outflows from the euro and the U.S. dollar.

Wall Street stocks were almost as unpopular as sovereign bonds from the hard pressed euro zone "periphery" such as Greece and Ireland.

"Investors clearly remain concerned about the sovereign debt burden of a number of peripheral euro zone nations and, as a result, are still keen to reduce their exposure to the euro as a result," BNY Mellon said in a note.

"On the other hand, they also have little faith in the outlook for the U.S. economy and are reducing their exposure steadily."

A broad retreat from riskier assets boosted gold and dented oil, with spot gold rising more than $3.50 to $1,256.60 while U.S. crude eased 0.5 percent to below $74 a barrel.

WASHINGTON Reuters Republicans in Congress showed little willingness to help President Barack Obama approve billions of dollars in measures to boost the economy with midterm elections less than two months away.

Obamas plans for hefty tax breaks for businesses are policies Republicans typically embrace, but the party has little motivation to give the Democratic White House a win with polls giving them strong hope of gaining seats in Congress -- possibly winning both houses in November.

Obama will announce his plans to stimulate the sagging U.S. economy in a speech on Wednesday in Cleveland.

He also hopes to aid consumers by extending Bush-era tax cuts for families earning less than $250,000, which are due to expire at the end of the year.

But the president will stick to his guns on insisting taxes go back up for wealthier Americans.

The New York Times, citing unnamed officials, said Obama would explicitly rule out a compromise on this issue during his remarks in Cleveland, holding to a line that White House spokesman Robert Gibbs insisted on Tuesday was never in doubt.

"The presidents viewpoint is that we cannot afford to extend the tax cuts for those making more than $250,000 a year," Gibbs told a regular White House news briefing.

Senate Republican leader Mitch McConnell said there was little appetite for new economic proposals from Obama, arguing that the $814 billion stimulus the president already pushed through Congress in early 2009 has not had the desired effect.

"After the administration pledged that a trillion dollars in borrowed stimulus money would create 4 million jobs and keep the unemployment rate under 8 percent, their latest plan for another stimulus should be met with justifiable skepticism," he said.

Obama needs support from Republicans, who are far outnumbered by Democrats in the current Congress but are nonetheless able to block legislation.

The Republicans hope to take the House of Representatives and perhaps even the Senate in the November 2 vote, which would put them in position to call the shots on any new economy-boosting initiative.

Even Obamas own Democrats held little hope of pushing new wide-ranging legislation through Congress to lift the economy.

REPUBLICAN OBSTRUCTIONISM

Steny Hoyer, the No. 2 Democrat in the House, said House Democratic leaders will "be looking at" Obamas initiative to add jobs through infrastructure projects. But he said it will be "very difficult to get a broad jobs agenda through" Congress, citing "Republican obstructionism."

With fellow Democrats facing punishment from recession-weary voters in November, Obama is under pressure to do more to create jobs and bring down the stubbornly high 9.6 percent unemployment rate, even as economists agree he has few good options left.

White House spokesman Robert Gibbs said officials there realize Congress has only weeks left to work before adjourning for the campaign trail ahead of November 2. He said Obamas plan "isnt about the next 60 days or the next 90 days," but rather is a long-term strategy for growth.

"In the end, this president and this administration will be graded on what happens at the end of this road, not some place in between," Gibbs said.

The Senate Banking Committee will hold a hearing September 21 on the need to invest in U.S. infrastructure, Committee Chairman Christopher Dodd said, in an attempt to get one of the Obama ideas onto the legislative agenda.

Obamas plans include a cut in business taxes worth $200 billion over two years, at an additional budget cost of $30 billion over 10 years.

The plans also seek a boost for infrastructure with an initial $50 billion investment, and increasing and permanently extending a tax credit for business research and development that would cost $100 billion over 10 years.

"These arent necessarily bad proposals, but they dont address the two big problems that are hurting our economy -- excessive government spending, and the uncertainty that Washington Democrats policies, especially their massive tax hike, are creating for small businesses," said House Republican leader John Boehner.

It was unclear what effect the plan would have on the large U.S. budget deficit.

Analysts say the new economic proposals direct government assistance to some of the strongest parts of the economy without solving the biggest problem: finding work for the 14.9 million unemployed.

QUESTIONS MARKS

Andrew Busch, a currency and public policy strategist at BMO Capital Markets in Chicago, said there were big question marks about how Obama intended to pay for them.

"If he chooses to take away a corporate tax break to pay for this proposal, the net gain is zero," he said. "This is likely why U.S. stocks are not seeing much of a bounce on the news."

Republicans said their main objective is for Congress to extend tax cuts enacted during the Bush administration which are set to expire this year. Party leaders are calling expiration of the cuts a tax hike.

Democrats want to extend the tax cuts for those making $250,000 a year or less, but Republicans want tax cuts for the wealthy to be retained as well.

Tax cuts should be extended for all Americans to help spur the economy, but even the middle-class cuts should end in two years, former U.S. budget director Peter Orszag said on Tuesday. Orszags views differed from those of his old boss, Obama.

Gibbs said the United States "cannot afford" to extend all the tax cuts.

Congress returns to session next week for a limited period of three to four weeks before lawmakers leave Washington for a final burst of elections campaigning.

Jim Manley, a spokesman for Senate Majority Leader Harry Reid, urged Republican help pass the new economic measures.

"We are continuing to work with the administration and others on how to proceed," said Manley. "But if we are going to get anything done, Republican cooperation, which has been all but nonexistent recently, will be necessary."

Additional reporting by Andy Sullivan, Kim Dixon, Richard Cowan, Ross Colvin and Caren Bohan; editing by Philip Barbara and Todd Eastham

SAN FRANCISCO Reuters Hewlett-Packard Co sued former Chief Executive Mark Hurd and asked a court to block him from joining Oracle Corp, saying his hiring by the rival technology firm puts HPs trade secrets "in peril."

Oracle, the worlds third-largest software maker, named Hurd co-president and director on Monday, a month after he resigned from HP over expense account irregularities related to a female contractor.

Hurds separation agreement from HP did not include a non-compete provision, which is generally unenforceable in California. But it did include a two-year confidentially pact.

In a civil complaint filed in Superior Court in Santa Clara County on Tuesday, HP said: "In his new positions, Hurd will be in a situation in which he cannot perform his duties for Oracle without necessarily using and disclosing HPs trade secrets and confidential information to others."

HP said if Hurd is allowed to go to Oracle it would "give Oracle a strategic advantage as to where to allocate or not allocate resources and exploit the knowledge of HPs strengths and weaknesses."

"Hurd cannot separate out HPs trade secrets and confidential information in performing his daily duties at Oracle," the complaint said.

Oracle, the worlds third-largest software maker, is an important partner of HP as well as a rival. Oracle competes with HP in the server market, following Oracles $5.6 billion purchase of Sun Microsystems, which closed earlier this year.

Hurd resigned from HP on August 6. HP said he filed inaccurate expense reports related to Jodie Fisher, a marketing contractor who worked for Hurds office from 2007 through 2009. Although Fisher leveled allegations of sexual harassment at Hurd, HP found no harassment had occurred.

Shares of HP were down 1.1 percent at $39.90 on the New York Stock Exchange. Shares of Oracle were up 5.8 percent at $24.26.

Reporting by Gabriel Madway; Editing by John Wallace and Richard Chang

TORONTO/SINGAPORE Reuters Chinas state-owned Sinochem Corp has invited Temasek, the Singapore sovereign wealth fund, to join a consortium that may bid for Canadas Potash Corp POT.TO, the worlds largest fertilizer supplier, sources with knowledge of the matter said on Tuesday.

The move follows an order by Chinese officials for state companies to meet investment bankers to explore ways to block BHP Billitons BHP.AXBLT.L $39 billion hostile bid for Potash Corp.

Further raising pressure on BHP to sweeten its bid, Potash Corp said on Tuesday it had contacts with several other parties that had shown interest in possible transactions. It has called the Anglo-Australian miners $130-a-share offer "grossly inadequate."

"A number of third parties have already expressed interest in alternative transactions, some whom we approached and others, who initiated contact on their own," Potash Corp Chief Executive Bill Doyle said in a video clip posted on the companys website. www.potashcorp.com

China, which typically buys about 7 percent of the output of Potash Corp, fears a BHP takeover might jeopardize supplies it will require to feed its huge population in coming years.

Potash Corp shares on Tuesday rose $1.11 to $149.61 on the New York Stock Exchange, or 15 percent more than the BHP offer price, reflecting anticipation of a higher bid eventually.

Shares of BHP closed down 1.4 percent in London, partly on concerns that Australias new Labor government might impose a new resource tax on iron ore and coal miners.

TEMASEK APPROACHED

Singapores Temasek, which manages $134 billion in assets, has made no decision on whether it will join a consortium, as proposed by the Chinese chemicals group, one of the sources told Reuters.

It was unclear if a bid to buy a blocking stake or to make a full counter-offer was under consideration.

"The consortium is coming along, but the situation is still fluid," said the source.

That said, a full bid is more likely, according to a source familiar with the matter, given the experience the Chinese had with Rio Tinto RIO.L RIO.AX,

Rio last year scrapped a $19.5 billion tie-up with Chinese state-owned metals group Chinalco, leading to recriminations that bruised Sino-Australian ties.

Chinalco had earlier teamed with U.S. aluminum producer Alcoa Inc AA.N to pick up a 9 percent stake in Rio Tinto and become the miners biggest single shareholder.

The move forced BHP to raise an all-share offer for Rio when it went hostile. In the end BHP scrapped its bid, due to the global economic slump and Rios $40 billion debt pile, and it never had to resolve how it would deal with Chinalco.

BEHIND THE SCENES

An Asia-based resources banker said a Sinochem-led consortium would have difficulty mounting a successful approach for Potash Corp because of political opposition in Canada. For that reason, a consortium might need to bring in non-Chinese investors to make a bid more palatable.

The banker said other global diversified miners are also exploring potential options behind the scenes.

Temasek, which had high exposure to banks at the start of the global credit crisis, is looking to diversify its portfolio with investments in miners and energy companies.

Earlier this year it agreed to buy $500 million of non-voting convertible preferred shares in Chesapeake Energy CHK.N and later invested more in the U.S. utility. [nTOE65K069].

The state investor also bought C$500 million $483 million of securities in Canadas Inmet Mining IMN.TO and $50 million in Platmin Ltd PPN.TO this year.

A Temasek spokesman declined to comment and Sinochem was not immediately available to comment. The sources declined to be identified because the talks are not public.

REGULATORY PROCESS

In the meanwhile, BHP -- the worlds No. 1 miner -- is moving ahead on getting regulatory clearance for the proposed acquisition of Potash Corp.

BHP said that the Federal Trade Commission in the United States was unable to commence its review of the offer until the end of August.

BHP is therefore refiling its notification, that was originally filed on August 20, so as to comply with the Hart-Scott-Rodino Antitrust Improvement Act of 1976.

BHP intends to refile its premerger notification on September 9, which will commence a new 15-day waiting period.

BHP Billiton said it is confident that it will obtain the necessary regulatory approvals for its acquisition of Potash Corp.

Additional reporting by Denny Thomas and Joseph Chaney in Hong Kong; Editing by Frank McGurty

SINGAPORE Reuters Chinas state-owned chemicals group Sinochem Corp has approached Singapore state investor Temasek to join a consortium that may bid for Canadas Potash Corp POT.TO, sources with knowledge of the deal said on Tuesday.

The move appeared to underpin Reuters reports that Chinese officials had ordered state companies to meet investment bankers to explore ways to block BHP Billitons BHP.AX $39 billion bid for Potash Corp.

Potash Corp, based in the western Canadian province of Saskatchewan, is facing a $130-a-share hostile takeover bid from BHP, the worlds largest miner.

Potash, the worlds No. 1 potash producer, has rejected the offer as "grossly inadequate."

Temasek, which manages $134 billion in assets, has been approached, one of the sources told Reuters, but added it had made no decision on whether it will join the consortium.

It was unclear if this potential consortium will bid to buy a blocking stake or make a full counter offer.

But given the experience the Chinese had with Rio Tinto RIO.AX, a blocking stake is unlikely and it will be a full bid if it happens, according to a source familiar with the matter.

"The consortium is coming along, but the situation is still fluid," said the source.

Rio RIO.AX RIO.L last year scrapped a $19.5 billion tie-up with Chinese state-owned metals group Chinalco, sparking a falling-out which bruised Sino-Australian ties.

Chinalco had teamed up with U.S. aluminum producer Alcoa Inc AA.N to pick up a 9 percent stake in Rio Tinto and become the miners biggest single shareholder.

The move forced BHP to raise an all-share offer for Rio when it went hostile. In the end BHP scrapped its bid due to the global economic slump and Rios $40 billion debt pile, and never had to resolve how it would deal with Chinalco.

BEHIND THE SCENES

An Asia-based resources banker said it is going to be very difficult for a Sinochem-led consortium to succeed in an approach for Potash Corp because of political opposition in Canada.

The consortium might need to bring in international players to make the bid more legitimate.

The banker said other global diversified miners are also searching for potential options behind the scenes.

Temasek, which had high exposure to banks at the start of the credit crisis, has been diversifying its portfolio with investments in miners and energy companies.

Earlier this year it agreed to buy $500 million worth of non-voting convertible preferred shares in Chesapeake Energy Corp CHK.N and later invested more.

The state investor also bought securities worth C$500 million $483 million in Inmet Mining IMN.TO and $50 million in Platmin Ltd PPN.TO this year.

A Temasek spokesman declined to comment and Sinochem was not immediately available to comment.

The sources declined to be identified because the talks are not public.

Additional reporting by Denny Thomas and Joseph Chaney in Hong Kong; Editing by David Cowell

BERLIN Reuters Google will launch its new service to bring the Web to TV screens in the United States this autumn and worldwide next year, its chief executive said, as it extends its reach from the desktop to the living room.

Eric Schmidt said the service, which would allow full Internet browsing via the television, would be free and that Google would work with a variety of programme makers and electronics manufacturers to bring it to consumers.

"We will work with content providers but it is very unlikely that we will get into actual content production," Schmidt told journalists after a keynote speech to the IFA consumer electronics trade fair in Berlin.

The announcement came less than a week after rival Apple

unveiled its latest Apple TV product, and heats up a battle for consumers attention and potentially the $180 billion global TV advertising market.

Schmidt also said Google would announce partnerships later this year with makers of tablet computers that would use Googles new Chrome operating system, due to be launched soon, rather than its Android phone software that has been used for mobile devices until now.

Google plans to make its Chrome browser, which competes with Microsofts Internet Explorer and Mozillas Firefox, the center of an operating system that would offer an alternative to Microsoft Windows.

Reporting by Nicola Leske; Editing by Hans Peters

LONDON Reuters Change swept through the top of Britains banks on Tuesday as Barclays BARC.L said its investment banking supremo Bob Diamond will take over as chief executive and HSBC HSBA.L said its chairman is leaving to go into government.

HSBC, Europes biggest bank, said Stephen Green would step down to become trade and investment minister in Britains coalition government. A successor was not named.

HSBC said it had started a search for a replacement and expects to approve one by the end of the year. The bank prides itself on its succession strategy, but Tuesdays statement was forced by reports that Green was set to leave.

HSBCs share price was unchanged at 662 pence at 1331 GMT 9:31 a.m. EDT, when the Stoxx 600 European banking sector index .SX7P was down 1.4 percent.

Green, 62, joined HSBC in 1992 and was appointed chief executive in 2003 before taking up the role of chairman in 2006.

Mervyn Davies, a former chairman of Standard Chartered STAN.L, served as trade minister under the Labour government which lost power in May, and the new government has had difficulty replacing him.

Earlier in the day Barclays said Diamond, credited with rebuilding its investment bank since joining 14 years ago and earning headline-making bonuses in the process, will become chief executive when John Varley steps down at the end of March.

Varley had indicated that he wanted to move on when he turned 55, which happens the day after his planned departure.

The handover to Diamond, who is 59 and missed out on the top job when Varley took the helm six years ago, comes as no surprise to industry analysts, who said it meant the bank was likely to keep much of its focus on the investment banking arm, Barclays Capital, which has been the groups main source of profits in recent years.

Although the appointment puts the retail banking business in the shade, there is unlikely to be any change in strategy away from its universal banking model, the bank and analysts said.

"Hes absolutely committed to making Barclays Capital the worlds number one investment bank. The unique selling point for Barclays is that they are a universal bank and they will lend and finance and source funding for your deal, and Bob has been the champion of that model," said Simon Maughan, analyst at MF Global.

HSBC SUCCESSOR?

Greens departure prompted speculation on who will replace him.

Chief Executive Michael Geoghegan, who this year moved his office from London to Hong Kong, is a candidate. So too are board members John Thornton and Simon Robertson.

Media speculation swirled in May that Green would leave, but he said at the time he was planning to stay at the helm for at least another year.

But the bank said on Tuesday Prime Minister David Cameron had invited Green to join his government.

Barclays Varley has also been linked to a government job. But he said on Tuesday he had nothing new lined up and planned to spend more time on his charitable work.

He will remain as a senior advisor on regulatory matters at Barclays until October 2011.

BANK BREAK-UPS?

A UK Independent Commission on Banking is considering whether Barclays, HSBC and the other big UK banks should be split up, to separate their riskier investment banking businesses from retail lending.

However, if it forces a change after it reports back to the UK government in a years time, then Diamond could move the banks domicile or go off to lead a separate investment bank, analysts said.

Barclays, HSBC and Standard Chartered STAN.L have all threatened to leave Britain should a break-up be ordered.

By 1331 GMT Barclays shares were down 3 percent at 313 pence, valuing it at 39 billion pounds, as dealers cited worries that the bank will shift its emphasis even further toward investment banking.

But Chairman Marcus Agius said it was premature to speculate on the Commissions findings and Diamond said there would be no change for strategy at Britains third biggest bank, which avoided taking taxpayer bailout cash during the financial crisis and has emerged as one of the relative winners.

"There is absolutely no space between John and Marcus and I on the strategic direction of Barclays.

"We have a lot of work to do around execution, but there is no change of strategy here," Diamond told reporters on a conference call.

Affable and charismatic, the Concord, Massachusetts-born son of two teachers has built BarCap into one of the leading banks in debt markets and is attempting to take on Wall Street powerhouses such as Goldman Sachs GS.N by expanding into equities and advisory, boosted by the takeover of the U.S. operations of Lehman Brothers two years ago.

Diamond, who also runs Barclays private banking arm and recently took control of the commercial bank, will move back to London after spending most of his time in New York after the Lehman deal. He will become deputy CEO for a handover period from October.

Diamonds long-time lieutenants Jerry del Missier and Rich Ricci will take over as co-chief executives of BarCap from October. Del Missier, who joined BarCap soon after Diamond, will be based in New York, while Ricci who joined in 1994, will be based in London. They were already co-chief executives for investment and corporate banking.

Part of the reason Diamond moved to New York is said to have been because of the intense scrutiny on his pay.

He has not taken a bonus in the last two years, but despite a base salary of only 250,000 pounds he was paid 21 million pounds in 2007 and received 26 million pounds last year for shares cashed in from the sale of asset management arm BGI, prompting a senior government official to brand him the "unacceptable face" of banking.

As CEO his base salary will rise to 1.35 million pounds, topped up by an annual bonus of up to 3.4 million pounds and an annual long-term share incentive scheme worth 6.8 million in 2011.

Additional reporting by Myles Neligan, Karolina Tagaris, Keith Weir and Sudip Kar-Gupta; Editing by Greg Mahlich

BANGALORE Reuters Midstream energy services provider Enterprise Products Partners LP EPD.N said it would buy Enterprise GP Holdings LP EPE.N for about $8.03 billion to reduce its capital costs and simplify its partnership structure.

Enterprise Holdings owns the general partner of, and limited partner interests in, Enterprise Products.

Under the deal, Enterprise GP unitholders would receive 1.5 Enterprise Products common units in exchange for each Enterprise GP limited partner unit.

The deal values Enterprise GP at about $57.68 share, a premium of 16 percent to the stocks Friday close.

Enterprise GP has about 139.2 million shares outstanding as of August 1, according to Thomson Reuters data.

The merger will lower Enterprise Products long-term cost of capital through the permanent elimination of the general partners incentive distribution rights.

Enterprise Products said the costs saved on the incentive distribution will be invested in organic growth projects and acquisitions.

Enterprise GP will become a unit of Enterprise Products.

Units of Enterprise Products closed at $38.45 Friday on the New York Stock Exchange. Units of Enterprise GP, which have risen over 80 percent over the last 52 weeks, closed at $49.90.

Reporting by Thyagaraju Adinarayan in Bangalore

LONDON Reuters Futures for the Dow Jones industrial average, the S&P 500 and the Nasdaq 100 fell 0.2 to 0.7 percent, pointing to a weaker start on Wall Street on Tuesday.

U.S. President Barack Obama, scrambling to spur job creation, proposed a six-year plan on Monday to rebuild U.S. infrastructure with an initial $50 billion investment and prepared new business tax cuts.

Silicon Valley technology giant Oracle Corp ORCL.O has hired Mark Hurd, the former chief executive of Hewlett-Packard Co HPQ.N who resigned amid a scandal, as president.

The U.S. Justice department is looking into Google Incs GOOG.O takeover of airline ticketing software firm ITA Software Inc, to determine whether the deal would exert too much influence on the online travel industry, the Wall Street Journal said.

China wants to reduce tensions with the United States through quiet talk, not shouting matches, a top diplomat told White House advisers on Tuesday, aiming to pave the way for a visit by President Hu Jintao early next year.

American International Group Inc AIG.N is leaning toward a new sale of its Taiwan unit, according to one of the original buyers, opening the way for a number of Taiwanese banks who have expressed interest.

Resource-related stocks will be in focus, with crude oil extending losses as the dollar strengthened and Tropical Storm Hermine made landfall near the Mexico-Texas border with no signs of disruption to crude or refining output.

The U.S. market was closed on Monday for a holiday. On Friday, the Dow Jones industrial average .DJI shot up 127.83 points, or 1.24 percent, to 10,447.93, marking a move back into the black for the year. The Standard & Poors 500 Index .SPX gained 14.41 points, or 1.32 percent, to 1,104.51. The Nasdaq Composite Index .IXIC rose 33.74 points, or 1.53 percent, to 2,233.75.

The S&P 500 closed above 1,100 for the first time since August 10. Momentum measures, including the moving average convergence-divergence, indicated the benchmark was poised for more gains.

Japans Nikkei average .N225 fell 0.8 percent on Tuesday, dented by profit-taking after four days of hefty gains and as the yens strength showed little sign of abating.

European shares fell 0.5 percent on Tuesday, with banks down after a news report renewed jitters about the health of the sector, though the market got some support from drugmakers as investors bought defensive stocks.

Reporting by Atul Prakash; Editing by Erica Billingham

LONDON Reuters Change swept through the top of Britains banks on Tuesday as Barclays BARC.L said its investment banking supremo Bob Diamond will take over as group chief executive next year and HSBC HSBA.L was expected to announce later that its chairman is going into government.

Barclays said Diamond, credited with rebuilding its investment bank since joining 14 years ago and earning headline-making bonuses in the process, will take over from Chief Executive John Varley at the end of March.

Varley had indicated that he wanted to move on when he turned 55. The handover to Diamond, who is 59 and missed out on the top job when Varley took the helm six years ago, comes as no surprise to industry analysts, who said it meant the bank was likely to keep much of its focus on the investment banking arm, Barclays Capital.

"Bob Diamond has been the main force driving the very successful expansion of BarCap. With him as CEO we would expect the CIB corporate and investment banking angle of the bank to grow even more, in detriment of the retail angle," said Arturo de Frias, analyst at Evolution.

Diamond said there would be no change in strategy at the bank, which avoided taking taxpayer bailout cash during the financial crisis and has emerged as one of the relative winners of the financial crisis.

"There is absolutely no space between John and Chairman Marcus Agius and I on the strategic direction of Barclays. We have a lot of work to do around execution, but there is no change of strategy here," Diamond told reporters on a conference call.

Affable and charismatic, the Concord, Massachusetts-born son of two teachers has built BarCap into one of the leading banks in debt markets and is attempting to take on Wall Street powerhouses such as Goldman Sachs GS.N by expanding into equities and advisory, boosted by the takeover of the U.S. operations of Lehman Brothers two years ago.

Diamond, who also runs Barclays private banking arm and recently took control of the commercial bank, will move back to London after spending most of his time in New York after the Lehman deal. He will become deputy CEO for a handover period from October.

Diamonds long-time lieutenants Jerry del Missier and Rich Ricci will take over as co-chief executives of BarCap from October.

Diamond is one of Europes highest paid bankers. He has not taken a bonus in the last two years, but was paid 21 million pounds in 2007 and received 26 million pounds last year for shares cashed in from the sale of asset management arm BGI, prompting a senior government official to brand him the "unacceptable face" of banking.

As CEO his base salary will be 1.35 million pounds $2.07 million, topped up by an annual bonus of up to 3.4 million pounds and an annual long-term share incentive scheme worth 6.8 million pounds in 2011.

HSBC CHANGE

Meanwhile HSBCs chairman Stephen Green is set to step down from Europes biggest bank to become trade minister in Britains coalition government, British media reported.

Confirmation was expected later on Tuesday.

Green, 62, joined HSBC in 1992 and was appointed chief executive in 2003 before taking up the role of chairman in 2006.

Mervyn Davies, a former chairman of Standard Chartered STAN.L, served as trade minister under the Labour government which lost power in May, and the new government has had difficulty replacing him.

There has been speculation for some time that Green would step down, and in May the Sunday Telegraph newspaper said board members John Thornton and Simon Robertson were the frontrunners to replace him as chairman.

Barclays Varley has also been linked to a government job. But he said on Tuesday he had nothing lined up and planned to spend more time on his charitable work.

Reporting by Steve Slater, Kate Holton, Myles Neligan, Karolina Tagaris, Keith Weir and Sudip Kar-Gupta; Editing by Greg Mahlich

NEW YORK Reuters Silicon Valley technology giant Oracle Corp has hired Mark Hurd, the former chief executive of Hewlett-Packard Co who resigned amid a scandal, as president.

Hurd, a close friend of Oracle CEO Larry Ellison will replace Charles Phillips, who has resigned, Oracle said in a statement on Monday. Phillips was co-president alongside Safra Catz, who remains in her role.

Ellison had slammed HPs decision to oust Hurd, calling the actions of HPs board "cowardly.

Hurd resigned from HP on August 6, after a probe into sexual harassment allegations. HP said at the time that he filed inaccurate expense reports related to Jodie Fisher, a marketing contractor who worked for Hurds office from 2007 through 2009.

"Mark did a brilliant job at HP and I expect hell do even better at Oracle," said Ellison in a statement on Monday.

Shares of HP are down 13 percent since Hurds resignation. Plucked from relative obscurity to head HP, Hurd is credited with resuscitating the technology giant by cutting costs and pursuing ambitious acquisitions.

HP said the expense reports were meant to hide a "close personal relationship" with Fisher, a sometime actress who has appeared in television shows and movies.

Oracle, the worlds third largest software maker, competes with HP as well as with International Business Machines Corp and SAP.

"I believe Oracles strategy of combining software with hardware will enable Oracle to beat IBM in both enterprise servers and storage," Hurd said in Mondays statement.

In June, Oracle reported a quarterly profit that exceeded Street projections and a 14 percent climb in sales of new software, signaling the tech spending recovery is on track as businesses shell out on big-ticket items again.

"Oracle is clearly capitalizing on this opportunity to get someone strong from a top hardware company," said Forrester analyst James Staten. "In terms of how this helps Oracle against IBM, there is reason to be optimistic."

Still, Staten noted there will now be two strong personalities at the top.

"So Mark Hurd will have someone whos very hands-on sitting above him," Staten said. "But we have to assume theyll get along."

PHILLIPS DEPARTED

Phillips, along with Oracles other president Catz, had at one time been seen as a possible successor to Ellison.

A former star software analyst at Morgan Stanley, Phillips was put on the spot earlier this year when huge billboards depicting the married software executive with YaVaughnie Wilkins, his former mistress, appeared in New York, Atlanta and San Francisco.

The billboards with the words "You are my soulmate forever" appeared to be an attempt by Wilkins to embarrass Phillips after their relationship ended and he returned to his wife.

He was also publicly corrected by his company after he said Oracle could "easily" spend about double the $35 billion it had spent over the past five years. That prompted a company spokeswoman to issue a statement saying the company did not have a five-year M&A budget.

Ellison said in Mondays statement that Phillips had approached him last December "and expressed his desire to transition out of the company." Ellison said in the statement he asked him to stay on through the integration of Sun Microsystems. Oracle bought computer maker Sun in 2009 in a deal worth more than $7 billion.

Editing by Diane Craft and Lincoln Feast