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SINGAPORE (Reuters) � Asian stocks rose on Monday to their highest in more than two years in response to optimism on the U.S. economy, while the dollar dipped to five-month lows against the euro.

Markets climbed broadly, but analysts said that data showing increased U.S. business spending, which prompted a rise on Wall Street last Friday, were far from unequivocal.

Suggestions that the Federal Reserve might further resort to quantitative easing to stimulate the economy kept the dollar in check. It lost ground throughout the region.

The index of Asian stocks ex-Japan (.MIAPJ0000PUS) climbed 1.05 percent, hitting its highest point since June 2008. In Tokyo, the benchmark Nikkei (N.225) rose 1.4 percent, buoyed by exporters after the Wall Street jump, but traders said gains were capped by the yen's enduring strength.

Shares of consumer lenders plunged after media said struggling Takefuji Corp (8564.T) was preparing for bankruptcy protection. Analysts discounted fears that this would seriously affect the Nikkei but also said any rises would also be limited.

"Wall Street's rise has provided a bit of a boost but gains on the U.S. data are mainly because the figures weren't quite as bad as expected, not that they were really good," said Takashi Ushio, head of the investment strategy division at Marusan Securities. "So gains on this alone will be limited."

Seoul shares also posted gains, though these were mitigated by pressure on Hyundai Motor, South Korea's top carmaker, which announced it was recalling some 139,500 Sonata sedans sold in the United States. Hyundai declined 2.17 percent.

RISE IN BUSINESS SPENDING

Economic reports on U.S. durable goods orders and home sales were mixed on Friday, but traders focused on a rise in business spending in August as the latest sign of a firmer recovery.

Wall Street gained almost 2 percent, putting U.S. stocks on course for four weeks of gains.

But subdued home sales and signs that manufacturing growth was slowing reinforced the view that the Fed may provide more monetary support to help the economy.

On Monday, the dollar was subject to further pressure.

It hovered near five-month lows to the euro and eight-month lows against a basket of currencies, pausing after steep losses last week and keeping the euro from pushing to new highs against $1.3500.

The dollar, quoted at 84.24 yen at 10:30 p.m. EDT, was hurt on Friday by stronger-than-expected data in Europe and expectations of further easing by the Federal Reserve.

One trader at a Japanese bank said dollar/yen would be caught between caution over another intervention by Japanese authorities and possible dollar selling by Japanese exporters ahead of the end of the first half of Japan's fiscal year.

"But even if stops near 84.00 yen are hit, I don't think we're in a market where the dollar will keep falling rapidly," he said. "It's scary to sell the downside."

Japan intervened on September 15 minutes after the dollar hit a 15-year low of 82.87 yen, selling an estimated 2 trillion yen ($23.7 billion), its largest single-day yen selling intervention.

The euro stood at 1.3466 after rising as far as $1.3496 on Friday, its strongest since late April.

Oil on Monday climbed to near $77, the highest level since mid-September, extending last week's rally as energy and commodities regain the favor of investors with a weaker dollar and resurfacing risk appetite.

(Editing by Tomasz Janowski)

NEW YORK (Reuters) � American International Group Inc and the U.S. government are moving closer to a deal on how the Treasury Department would exit its investment in the bailed-out insurer, sources familiar with the situation said on Sunday.

The situation, however, is still fluid and there are many moving parts, one of the sources said.

The plans may be unveiled as early as this week, but the exact timing of an announcement depends on the pace of negotiations, Bloomberg reported.

A possible conversion of the Treasury's $49 billion preferred stake in AIG into common stock is one of the options being discussed, Reuters previously reported.

Such a conversion, which could start as soon as the first half of next year, would possibly raise the government's stake in AIG to above 90 percent from nearly 80 percent. The Treasury would sell its common stake to investors over time.

"Our objective remains the same at AIG, which is to repay taxpayers and position AIG over time as a strong, independent company worthy of investor confidence," AIG said. The sources are anonymous because talks are not public.

The exit plan being discussed would chart the eventual disengagement of the government from AIG, which was propped up by a $182.3 billion taxpayer-funded aid package during the financial crisis.

The bailout saw funds from the Federal Reserve Bank of New York and the Treasury, and was structured so that the Fed must be paid back first, which AIG still has to do. But the talks show that the insurer is making progress in its restructuring.

AIG owes the Fed about $21 billion under a credit facility. The Fed also owns $25 billion worth of preferred interest in two of AIG's foreign life insurance units that must be monetized.

The company expects a big part of that money to come in by the end of the year as it closes on the sale of American Life Insurance Co to MetLife Inc for $15.5 billion and lists American International Assurance (AIA) in Hong Kong. AIA is planning an estimated $15 billion IPO next month in Hong Kong.

(Reporting by Paritosh Bansal in New York, editing by Martin Golan)

BEIJING (Reuters) � A rise in the value of the yuan may intensify expectations for further increases and could lead to a worsening of China's international payments imbalance, a regional central bank official said in comments published on Monday.

The comments by Xu Nuojin, deputy head of the People's Bank of China (PBOC) Guangzhou, were published in the Financial News, a paper run by the central bank, and come amid growing pressure from Washington for faster yuan appreciation.

"Any efforts to address the international payments balance by adjusting the yuan exchange rate will achieve no results," Xu wrote in an opinion piece.

He did not elaborate on the currency issue, but he added that China has to boost consumption and investment to address the problem of high savings levels in the Chinese economy.

Many Chinese economists and officials, like Xu, have reiterated their view that the yuan, also known as the renminbi, is not undervalued and should not be blamed for China's trade and economic imbalances.

(Reporting by Zhou Xin and Kevin Yao; Editing by Ken Wills)

HONG KONG (Reuters) � American International Group Inc (AIG.N) will be required to hold a 30 percent stake in its Asian life insurance business, AIA Group Ltd, for a year after AIA's listing next month, the term sheet showed on Monday.

AIA's share offering is expected to raise about $15 billion, which will help its parent AIG to return part of the aid it received from the U.S. government during the financial crisis.

AIA began pre-marketing for the IPO on Monday to gauge demand and is expected to set a price range in coming weeks.

AIA was likely to sign up cornerstone investors during pre-marketing, ahead of its schedule to list on October 29, sources previously told Reuters.

The cornerstone investors would be subject to a lock-in period of six months, the term sheet showed.

AIA's management team is in advanced talks with several Middle Eastern and Asian sovereign funds to sell cornerstone stakes in AIA, which is the next major step in AIA's listing process.

Over the weekend, AIG said AIA would likely post a pre-tax operating profit of at least $2 billion for the fiscal year ending in November.

AIG, nearly 80 percent owned by the U.S. government, is disposing of assets to repay taxpayers who committed $182.3 billion to prop up the insurer during the financial crisis.

AIA would be unable to sell new shares within six months of listing, the term sheet showed.

Citigroup Inc (C.N), Deutsche Bank AG (DBKGn.DE), Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N) are joint global coordinators for the IPO.

(Reporting by Kennix Chim and Denny Thomas; Editing by Chris Lewis)

LONDON (Reuters) JPMorgan Chase (JPM.N) is the frontrunner to buy the remaining infrastructure of RBS Sempra Commodities (SRE.N), the Financial Times said on Monday, citing people familiar with the deal.

French bank Societe Generale (SOGN.PA) is among those said to be considering acquiring the group's North American gas and power trading book, the paper said.

The U.S. bank earlier this year bought RBS Sempra's global oil, metals, coal and European power and gas business for $1.6 billion.

(Reporting by Karolina Tagaris; Editing by Lincoln Feast)

PHILADELPHIA (Reuters) � French drugmaker Sanofi-Aventis is seeking to line up more funding to potentially raise its $18.5 billion bid for Genzyme Corp, The Wall Street Journal reported on Sunday.

Sanofi recently approached lenders such as Citigroup Inc and Bank of America Corp about funding a higher bid, the report said. Sanofi has said it already has financing from J.P. Morgan Chase & Co, BNP Paribas SA and Societe Generale SA.

Sanofi has asked Genzyme to quote a price that would be high enough to spur the biotech company to start talks, but the biotech company has refused to name a pricetag, the report said.

The French drugmaker wants to reach a friendly agreement but has not ruled out a hostile offer made directly to Genzyme shareholders, sources previously told Reuters.

Last month, Genzyme rejected Sanofi's $69 per share offer as dramatically undervaluing the U.S. company and not a bid that justified entering merger talks.

Sources previously told Reuters that Genzyme sought an offer of at least $75 per share before Sanofi could review its books, while some investors want up to $80 a share in a deal.

Genzyme shares on Friday closed at $71.60 on Nasdaq.

Sanofi wants to buy Genzyme, a leading maker of drugs for rare diseases, to fuel growth as some of its key treatments lose patent protection.

Sanofi and Genzyme could not immediately be reached for comment.

WASHINGTON (Reuters) � Some traders are manipulating U.S. stocks that are worth less than $1 by taking both sides of trades in order to earn big rebates, according to an official at Knight Capital Group Inc (KCG.N).

Knight, a top U.S. market maker for individual investors, and the other four largest market makers discussed this problem with federal securities regulators on Thursday, Jamil Nazarali, Knight's global head of electronic trading, told reporters on Friday.

"It happens for hundreds of millions of shares per day," Nazarali said, adding that this type of market manipulation is hard to prove. The gaming costs Knight "tens of thousands of dollars" per day on some days, he said on the sidelines of a Security Traders Association conference here.

Nazarali added that U.S. Securities and Exchange Commission officials "seemed empathetic" to the concerns of the five firms that execute much of the orders of individual, or retail, investors -- Knight, UBS AG (UBS.N), Citadel Investment Group, Citigroup Inc (C.N), and E*Trade Financial Corp (ETFC.O).

SEC spokesman John Heine neither confirmed nor denied the meeting. He did not comment on gaming in sub-dollar stocks.

The manipulation concerns come months after the May "flash crash" stoked a debate over fairness in the mostly electronic marketplace, which has grown faster and increasingly complicated in the last decade.

At issue is whether an individual trader is using separate brokerage accounts to trade against himself, something known as a wash trade. Shares that regularly trade below $1, such as Sirius XM Radio Inc (SIRI.O) and Level 3 Communications Inc (LVLT.O), are the typical targets, Nazarali said.

Exchanges charge fees to those that execute against standing buy and sell orders, something called a take fee, and pay rebates to those that provide standing orders that are executed against. This is known as "maker-taker" pricing.

While stocks are normally priced in penny increments, rules adopted five years ago allow exchanges to price sub-dollar stocks in one-hundredth of a cent. The fees and rebates, however, are based on penny increments for all stocks, including sub-dollar stocks -- which creates a possible loophole through which traders can earn out-sized rebates.

A trader can, for example, send a "limit order" bid through one brokerage account, and a corresponding "market order" to sell that same stock in another account. After trading with himself, the trader earns the bid's rebate and pays the smaller selling fee -- which is usually fixed at retail brokers like E*Trade -- and walks away with the difference.

In this scenario, market makers such as Knight would foot much of the bill.

For a short period earlier this year, large exchanges paid outsized fees and rebates in sub-$1 stocks, but did away with it in the spring after protests from market makers, said William Karsh, chief operating officer at exchange operator Direct Edge.

The smaller CBOE Stock Exchange, or CBSX, offers the out-sized rebates now. The exchange, run by Chicago-based CBOE Holdings Inc (CBOE.O), has seen its market share rise in sub-dollar stocks this summer.

"CBOE takes its regulatory responsibility very seriously and does investigate unusual trading activity," a CBOE spokeswoman said. "However we do not comment on individual investigations."

Nazarali said Knight has reported this activity to regulators on a daily bases in recent weeks, and has brought it to the attention of the Financial Industry Regulatory Authority.

"It is really damaging to investors," Nazarali told reporters.

The SEC in recent weeks said it is probing trading and quoting activity for evidence of market fraud and manipulation. In a comprehensive paper issued in January, the agency asked whether pricing in the market is problematic.

(Reporting by Jonathan Spicer, editing by Martin Golan)

WASHINGTON (Reuters) � One day after the Federal Reserve got investors thinking about uncomfortably low inflation, Starbucks announced it was raising prices on some of its coffee drinks.

Anheuser-Busch is planning price hikes on some of its Budweiser beers later this year (although it's also going to give away free samples to 500,000 people at bars and restaurants in the coming weeks).

So is inflation dangerously low or is it creeping higher?

It depends where you look.

The Fed said last week that inflation was below its comfort level and likely to stay that way for some time. The central bank said it was prepared to step in if necessary to ensure that this doesn't morph into something serious like deflation.

The Fed's favorite inflation gauge -- the ineloquently named core PCE price index -- is due on Friday and is likely to show a slight uptick for September, according to a Reuters poll. On a year-over-year basis, the index is expected to hold steady at 1.4 percent, below the Fed's comfort zone of 1.7 percent to 2 percent.

The measure excludes food and energy prices, which the Fed considers too volatile to provide a reliable signal on future price direction. But food, energy and other major commodity groups have soared in the past couple of months, which explains why companies like Starbucks are raising prices.

The Reuters-Jefferies CRB Index (.CRB), which tracks commodity prices, hit an 8-month high last week. Gold prices hit a record level and other commodities, including soybeans and cotton, notched multi-year peaks.

This is causing trouble for commodity-sensitive emerging markets such as Russia. Its central bank meets on Tuesday and is widely expected to hold rates steady. But it may express growing concern about inflationary pressures after a summer drought devastated the country's wheat crop.

It is less clear what these rising commodity prices will mean for the U.S. economic recovery and the Fed's next policy move. High unemployment and sluggish consumer spending mean many companies cannot follow Starbucks' lead and pass higher raw material costs along to consumers.

Jason Schenker, president of Prestige Economics in Austin, Texas, says the lofty jobless rate makes consumers "very, very price sensitive," which means rising commodity prices probably won't have much of an effect on broader inflation trends.

Oil tends to seep more deeply into consumer prices because it touches each stage of production, from factory to delivery truck to storefront. But it has not risen as sharply as some of the agricultural products or metals.

"Seventy-five dollar oil does not a story make," Schenker said.

UP OR DOWN?

Inflation at 1.4 percent isn't exactly Japan-style deflation. Richmond Federal Reserve Bank President Jeffrey Lacker said it's quite possible for inflation to run between 1 percent and 1.5 percent for a while without slipping into deflation.

But some economists are not so sure. David Rosenberg, chief economist at money management firm Gluskin Sheff in Toronto, thinks deflation is a serious threat, and says the Fed may not be up to the challenge of combating it.

"The current crew of policymakers have only lived their lives fighting inflation and actually have no experience at all in combating deflation," he said.

Rosenberg sees the building blocks of deflation in the high unemployment rate, the weak housing market and the heavy load of debt that still weighs on household spending.

But he also expects commodity prices to push in the opposite direction, particularly oil and gold, propelled higher by demand from emerging economies, as well as investors seeking safety from either deflation or a weakening dollar.

For the Fed, consumers' expectations are more important than those of analysts, so the most salient piece of information this week may come from the Reuters-University of Michigan survey of consumers on Friday, which will include questions on inflation expectations.

The latest one-year inflation expectation reading was 2.2 percent, the lowest in a year. If that continues to slide, it could set off alarm bells at the Fed and heighten investors' expectation that more policy easing will come.

Then again, if people pay more for their Starbucks and beer and start thinking all prices are heading higher, expectations may edge up, which wouldn't be all that terrible for a central bank worried about ultra-low inflation.

(Additional reporting by Mark Felsenthal; Editing by Dan Grebler)

NEW YORK (Reuters) � U.S. stock investors will head into this week wondering if September will end as strongly as it began for the market, with manufacturing and personal income data among the top indicators on tap.

The data will be watched for further clues on whether the economic recovery is still on track and to see if the market's recent rally has support.

Friday's advance left the three major U.S. stock indexes with gains for the fourth week in a row, boosting investors' confidence that the upward move will continue.

The Standard & Poor's 500 index (.SPX) is up 9.5 percent since the end of August. Last week, its move above the 1,130 level on Monday represented a technical breakout that analysts said suggested further gains were likely.

If the rally holds, it will make September the best month for the S&P 500 since at least March 2000, and the best September for stocks since 1939, according to Reuters' data.

"Sentiment has turned sharply higher over the past few weeks after very bearish readings last month," said Michael Sheldon, chief market strategist at RDM Financial, in Westport, Connecticut.

This week's data includes two manufacturing reports -- one from the Institute for Supply Management and another from the ISM-Chicago, better known as the Chicago Purchasing Managers Index. A Commerce Department report on personal income and spending is also on the agenda.

The last ISM manufacturing report "helped propel the markets higher," Sheldon said, recalling the S&P 500's gain of 3 percent on September 1, so "any disappointment could be a setback" for stocks.

OF FACTORIES AND PERSONAL FINANCE

Tepid demand amid a U.S. unemployment rate of 9.6 percent is expected to have caused a slowdown in manufacturing activity in September. The Institute for Supply Management's manufacturing index probably dropped to 54.5 in September from 56.3 in August, according to a Reuters poll of economists. A reading above 50 indicates expansion.

The week's data is also expected show moderate gains in personal income and consumer spending in August, consistent with views of an economy that is on a slow growth path, but not contracting. Both reports are due on Friday.

The Conference Board's consumer confidence index will be released on Tuesday, followed by the Thomson Reuters/University of Michigan's final September reading on its consumer sentiment index on Friday.

The final figures on second-quarter gross domestic product will be out on Thursday, with the Reuters poll forecasting growth at an annual rate of 1.6 percent -- matching the second, or preliminary, reading on the quarter's GDP.

On Friday, September domestic car and truck sales will be reported. A rise in total vehicle sales to an annual rate of 11.50 million units is seen versus August's 11.43 million.

READING THE S&P'S SIGNALS

The S&P 500's move above 1,130 last week let the broad index break out of its recent trading range.

Technical analysts are watching 1,173 as the S&P 500's next level of resistance. That level represents the high following the May 6 flash crash. Another level to watch is 1,220, the S&P 500's high for this year.

"What's so important about moving above a trading range is it signals a willingness to buy at higher prices. That type of evidence is supportive of further upside," said Chris Burba, a short-term market technician at Standard & Poor's in New York.

But "after such a huge run since late August, the odds of taking a breather here are increasing," he said.

For the past week, the Dow Jones industrial average (.DJI) advanced 2.4 percent, while the S&P 500 gained 2.1 percent and the Nasdaq (.IXIC) climbed 2.8 percent.

For the year so far, the Dow is up 4.2 percent, while the S&P 500 has gained 3 percent and the Nasdaq is up 4.9 percent.

This week also marks the end of the third quarter and options analysts expect fund managers to try to pick up some of the quarter's better performers.

"A lot of option traders are anticipating window dressing, which is helping the winners of the last quarter, specifically Apple Inc (AAPL.O), Netflix (NFLX.O), Amazon.com (AMZN.O) and some material names, such as Freeport McMoRan (FCX.N) and Vale (VALE5.SA) (VALE.N)," said Steve Claussen, chief investment strategist at online brokerage OptionsHouse LLC in Chicago.

The earnings slate is light, with just a handful of S&P 500 companies expected to report results, including Jabil Circuit (JBL.N), Paychex (PAYX.O), Walgreen (WAG.N) and Family Dollar Stores (FDO.N).

(Reporting by Caroline Valetkevitch, with additional reporting by Rodrigo Campos, Lucia Mutikani and Doris Frankel; Editing by Jan Paschal)

WASHINGTON (Reuters) � Treasury Secretary Timothy Geithner faces a lonely campaign to make China's currency a major issue at the next Group of 20 summit as would-be allies shrink from confronting Beijing.

Pressured by U.S. lawmakers, Geithner vowed last week to mobilize countries at the November 11-12 summit in South Korea to press China for faster appreciation of the yuan.

Interviews with officials from G20 countries suggest that Geithner -- who has acknowledged that few countries are willing to confront China -- could be leading a posse of one in Seoul.

"The U.S. is more determined than the rest of the G20 to get something out of China on the yuan," a euro zone monetary official said, speaking on condition of anonymity.

"It's largely a bilateral matter with the rest looking on as spectators, either because they don't count enough or because they aren't very interested," the official said.

South Korean Finance Minister Yoon Jeung-hyun ruled out the yuan as a G20 topic, saying the forum might take up exchange rates in general or their impact on the global economy.

"But aside from that, I do not believe that it is appropriate to have a discussion regarding the foreign exchange rate or level of a specific country," Yoon said in an interview with Reuters in Paris on Thursday.

Geithner's drive to make China's currency policy a G20 summit issue appears to be a way to buy time for President Barack Obama's administration as it deals with an angry Congress in the run-up to November 2 U.S. elections.

The Obama administration, and Geithner in particular, had largely avoided actions that would antagonize China in past G20 meetings. But it faces an increasing drumbeat of calls for action on the yuan from beleaguered Democrats who say a stronger Chinese yuan would bring relief to American workers.

In a move likely to increase tension with China, the House of Representatives Ways and Means Committee on Friday approved a bill that would let the United States slap duties on goods from countries with undervalued currencies.

The bill may never become law, however, because it faces uncertain prospects in the Senate.

Since China's central bank in June said it would let the yuan fluctuate more freely, it has risen 1.8 percent -- accelerating the most as U.S. pressure mounted.

Many U.S. lawmakers believe that China keeps its currency undervalued by as much as 40 percent to stoke exports at the expense of U.S. jobs, a claim questioned by many economists.

BRIC SOLIDARITY, ASIAN DEPENDENCY

China can count on solidarity from its partners in the so-called BRIC countries -- Brazil, Russia and India.

"I believe that this idea of putting pressure on a country is not the right way for finding solutions," Brazilian Foreign Minister Celso Amorim told Reuters last week.

Brazil, he said, enjoyed good coordination with China and "we can't forget that China is currently our main customer."

Russia likewise enjoys its trading relationship with China, exporting raw materials and energy but not the manufactured goods that compete against low-cost Chinese goods. Moscow tends to speak only in general terms about currency flexibility.

"Russia is unlikely to back this," said Evgeny Gavrilenkov, chief economist at Troika Dialog in Moscow.

"Russia does not have a big trade relationship with China, and politically I do not think it is profitable for Russia to back this either," he said.

Visiting New York this past week for the U.N. General Assembly, Chinese Premier Wen Jiabao flatly rejected any link between the level of the Chinese yuan and U.S. trade deficits.

China is increasingly assertive as its economic power grows -- all the more so in neighboring Asia.

It is home to five other G20 members, most of whom count China as their biggest trade partner.

"The rise of China, the increasing prominence of China, is a fact of life," said Indonesian Foreign Minister Marty Natalegawa.

"It is something that we must all embrace, and celebrate as a matter of fact, because Indonesia is benefiting as well with China's increasing economic prominence," he said.

Japan's recent intervention to push its own currency down from 15-year highs against the dollar makes Tokyo an unlikely standard-bearer for exchange rate rectitude and an awkward partner for any U.S. pressure on China, say analysts.

A second European monetary official predicted talk, but no walk at the G20 meetings.

"It's obvious that we talk about it, but that's as far as it goes. It's not on the agenda of Korea's G20 presidency and it won't be a major issue," said the official.

"China has basically been pretending to take significant steps on its currency for a long time, and I don't expect that to change for the time being," he added.

(Additional reporting by Toni Vorobyova in Moscow, Walter Brandimarte in New York, Doug Palmer in Washington and Daniel Flynn in Paris; Editing by Maureen Bavdek)

LONDON (Reuters) � Buyout firm Kohlberg Kravis Roberts (KKR.N) has bought Norway software company Visma for an enterprise value of 1.2 billion pounds ($1.88 billion) from private equity firm HgCapital, the companies said on Sunday.

HgCapital, which will retain a 17.7 percent stake in Visma, said the sale will deliver a return of 3.7 times its investment. The return is in line with its recent sales of other accounting software businesses.

Visma provides business software and process outsourcing in Scandinavia.

HGCapital Trust (HGT.L), the listed investment trust which invests in HGCapital deals, will realize cash proceeds of 39 million pounds from the sale, it said in a separate statement.

(Reporting by Rosalba O'Brien; Editing by Louise Heavens)

MILAN (Reuters) � Italian automaker Fiat (FIA.MI) is considering listing part of its sports car unit Ferrari to raise cash in order to increase its stake in U.S. carmaker Chrysler, Il Corriere della Sera said on Sunday.

Citing information gathered at Fiat's Turin headquarters Corriere said Fiat's main priority is to find liquidity to allow it to fund the acquisition of 51 percent of Chrysler and listing Ferrari could be the way of achieving this goal.

A Fiat spokesman denied the report.

"There are no plans for any Ferrari listing," he said.

Fiat, which owns 20 percent of U.S.-based Chrysler, is expected to increase its holding to 35 percent once it meets restructuring goals. It has an option to grow to 51 percent.

In a recent study Sanford C. Bernstein said it expected Fiat to raise its stake in Chrysler to 51 percent in 2011 or 2012.

According to Il Corriere, Fiat would keep a majority 51 percent stake in Ferrari which, it said, is worth $3.1 billion.

Fiat currently owns 85 percent of Ferrari. In September Fiat CEO Sergio Marchionne, who is also Chrysler CEO, said he wanted to return to an historic 90 percent level without however losing Abu Dhabi investment fund Mubadala which owns 5 percent.

(Reporting by Stephen Jewkes; Editing by Louise Heavens)

KOBE, Japan (Reuters) � Japan will ease monetary policy appropriately if necessary, while keeping an eye on the impact of the yen's rise on the economy, Bank of Japan Governor Masaaki Shirakawa said on Sunday.

Shirakawa, speaking at an event hosted by the Japan Society of Monetary Economics in Kobe, western Japan, also said the BOJ was watching the "downside risk" to the economy more closely.

He said the Japanese central bank had done the most aggressive easing in the world when looking at the size of its balance sheet in comparison with gross domestic product but that it did not mean he saw no need for further action.

"We'll respond (to the need of easing) timely and appropriately," Shirakawa told the seminar.

Tokyo intervened in the currency market on September 15 by selling yen for the first time in more than six years as the yen's surge to a 15-year high versus the dollar threatened to derail Japan's export-reliant recovery and worsen deflation.

The BOJ's next scheduled policy meeting is on October 4-5. Easing policy at this meeting cannot be ruled out, and options include increasing government bond purchases and expanding a cheap fund-supply tool, sources say.

(Reporting by Tetsushi Kajimoto; Editing by Nick Macfie)