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Reports from thousands of homeowners in their congressional districts show an "apparent pattern" of practices that led to foreclosures that could have been avoided, the lawmakers wrote in an October 4 letter to Attorney General Eric Holder, Federal Reserve Chairman Ben Bernanke and the Treasury Department.

The letter was signed by House Speaker Nancy Pelosi and 30 California lawmakers.

"The excuses we have heard from financial institutions are simply not credible three years into this crisis. People in our districts are hurting," the letter said. "It is time that banks are held accountable for their practices that have left too many homeowners without real help."

The lawmakers said thousands of people have reported that despite efforts to seek loan modifications or other relief many financial institutions "routinely fail to respond in a timely manner, misplace requested documents, and send mixed signals" about what is required to avoid foreclosures.

At least six states are investigating the foreclosure procedures at Ally Financial Inc or JPMorgan Chase or both.

Ally, formerly known as GMAC, revealed last month that officials had signed thousands of affidavits supporting foreclosure proceedings without having personal knowledge of the borrowers' situations.

A seventh state, Texas, on Tuesday halted all foreclosures, sales of foreclosed properties and evictions from foreclosed properties until foreclosure practices are reviewed.

(Editing by Eric Beech)

Gold hit yet another record high above $1,340 an ounce, while copper rose to its highest since July 2008 and oil rose to a five-month high as the dollar, driven by investor concern over the outlook for global growth, weakened further.

Risk assets soared on encouraging U.S. services sector data, the BOJ's rate cut and the Reserve Bank of Australia's decision not to raise rates, raising investor hopes that cheap money will flood global economies. The Federal Reserve has suggested it may engage in further quantitative easing unless the U.S. economic outlook improves.

"The thinking today is that the printing of money is going to take place," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

"The short-term impact of that is to drive asset prices higher. We've seen it almost across the board in commodities."

The BOJ's measures -- cutting its overnight rate target to virtually zero and pledging to buy 5 trillion yen ($60 billion) worth of assets -- pushed the Nikkei average .N225 to close 1.5 percent higher. The December futures contract for the Nikkei 225 stock index trading in Chicago rose 280 points to 9,630.

Tokyo's action came after Fed Chairman Ben Bernanke said on Monday that more asset purchases could further ease financial conditions and help the economy.

The euro jumped to its highest since February against the dollar on concerns that further U.S. quantitative easing could undermine dollar strength.

A U.S. equities rally was fueled further by data showing the pace of growth in the U.S. services sector, which accounts for 80 percent of U.S. jobs, accelerated last month more quickly than economists had expected, while hiring also picked up.

The Dow Jones industrial average .DJI closed up 193.45 points, or 1.80 percent, at 10,944.72. The Standard & Poor's 500 Index .SPX rose 23.72 points, or 2.09 percent, to 1,160.75, the highest level since mid-May. The Nasdaq Composite Index .IXIC gained 55.31 points, or 2.36 percent, to 2,399.83.

"Given unemployment and the state of the housing market, central banks didn't have a choice but to take steps like this, and it's what the market wanted to see," said Uri Landesman, president of New York-based Platinum Partners. "This could be a sign of things to come."

The pan-European FTSEurofirst 300 .FTEU3 index of top European shares closed up 1.4 percent at 1,066.12.

World stocks measured by the MSCI All-Country World Index .MIWD00000PUS rose 1.82 percent, its highest level since the end of April, while the Thomson Reuters global equity index .TRXFLDGLPU rose 0.23 percent.

DOLLAR'S LOSS

In currencies, the dollar index .DXY was down against major currencies, falling 0.77 percent to 77.834. The euro was up 1.10 percent at $1.3832 after climbing as high as 1.3860, an eight-month high. Against the Japanese yen, the dollar was down 0.17 percent at 83.20 after dipping as low as 82.96 yen on electronic trading platform EBS.

Still, discounters are likely to be among the most popular shops because consumers remain cautious, experts said.

The National Retail Federation forecast on Wednesday a 2.3 percent increase in sales in November and December, which would be the best performance since 2006. But even that increase would leave holiday sales below the $452.79 billion posted in 2007, before the housing bubble burst and the stock market tumbled.

Consumers are still selective about what they buy and continue to focus on price, the NRF said. High unemployment a tepid economic recovery have held back spending, even though the recession officially ended in 2009.

"While there might be some economists who have concluded the recession is over, it's clear that most consumers don't feel that the recession is over," NRF president Matthew Shay said during an interview.

The forecast of a 2.3 percent increase compares with a 0.4 percent increase in 2009 and the 3.9 percent decline in 2008.

"What retailers are hoping to get this holiday season is some indication that we have reached a sustained economic recovery and the back-to-school numbers gave us some indication that we are heading in that direction, though in a modest way," Shay said.

Back-to-school sales in August and September were better than expected, many analysts said, and that has helped lift retail stocks since the end of August. The Standard & Poor's retail index is up about 16.7 percent, compared with a 10.5 percent increase in the Standard & Poor's 500.

Retailers have also focused more on paring inventories to avoid deep, margin-sapping discounts, Shay said.

The NRF forecast is not the most bullish for the holiday season. On Tuesday, the International Council of Shopping Centers forecast an increase of 3 percent to 3.5 percent compared with 2.3 percent last year.

Among other recent forecasts, consulting firm Deloitte forecast a 2 percent increase in the November through January holiday period, better than 1 percent a year ago.

The holiday season traditionally begins on "Black Friday," the day after Thanksgiving. But retail industry executives say consumers have begun shopping for the holidays earlier in recent years to spread out their spending and take advantage of sales when they see them.

Also, a survey by consulting firm Accenture reinforced the view consumers are still frugal. Most consumers are not moved to purchase without a discount of 20 percent or more and more than one quarter require a discount of 50 percent or more. In fact, 81 percent of consumers said they would shop at discount stores for the holidays.

On the whole, 83 percent of those surveyed expect to spend the same or less on holiday gifts this year than last year, Accenture added.

(Reporting by Brad Dorfman; editing by Andre Grenon)

Additional fiscal stimulus --and not fiscal discipline-- is the way out of the crisis for both Europe and the United States, Soros said in a speech at Columbia University on Tuesday.

"Deficit reduction by a creditor country such as Germany is in direct contradiction of the lessons learnt from the Great Depression of the 1930s. It is liable to push Europe into a period of prolonged stagnation or worse," Soros said.

Germany is unlikely to change its ways, however, because its economy is doing well and because the difficulties of other countries can be blamed on structural rigidities, Soros said.

German Chancellor Angela Merkel also gained the upper hand in a recent G20 meeting where she joined forces with Canada and newly elected Conservative British Prime Minister David Cameron to put pressure on other countries to adopt austerity measures, Soros noted.

As a result, President Barack Obama yielded to the majority and agreed to cut the U.S. budget deficit by half by 2013.

"This may be the right policy but it comes at the wrong time," Soros said.

Soros doesn't think Obama should extend the tax cuts pushed

by his predecessor George W. Bush. Instead, he says, the government should direct the extra money coming from higher taxes into fiscal measures to stimulate investment, not consumption.

(Editing by Kenneth Barry)

Ford executives, who met on Monday and Tuesday with Lincoln dealers at Ford headquarters, said the No. 2 U.S. automaker plans to remake Lincoln by differentiating it more sharply from its mass-market Ford vehicles.

As part of that effort, Ford will focus on the top 130 U.S. metro areas by population, an area where it has about 500 Lincoln dealerships now, executives said.

Ford expects that about 175 dealerships in urban and suburban neighborhoods will have to be closed down. Buyouts will be offered to dealers who choose to close in meetings set to start in November, executives told reporters on Tuesday.

Ford Credit, the in-house financing arm of the automaker, will also offer credit to help the remaining dealers finance the improvements that they will have to make to stay with the Lincoln brand, U.S. sales chief Ken Czubay said.

Only about a quarter of Ford's 1,187 Lincoln dealers now have the kinds of facilities that the automaker believes it needs to compete with luxury-market competitors like Volkswagen AG's (VOWG.DE) Audi and Daimler AG's (DAIGn.DE) Mercedes, Czubay said at a briefing by Ford.

"Our volume needs to be where the luxury buyer is," Czubay said of Ford's decision to focus on urban markets in the overhaul of Lincoln.

Some 88 percent of U.S. luxury auto sales are in the top 130 biggest U.S. markets, Ford said.

Lincoln's rural dealerships will have to decide whether they will continue to represent the brand and make the required investment in new facilities, executives said.

Ford expects to have agreements in place with dealers in about a year, dealers said.

Lincoln was a top-selling luxury brand in the United States until the 1990s.

By 2009, Lincoln sales had dropped to just under 83,000 vehicles in the United States, less than half of the sales for the luxury market leader, Toyota Motor Corp's (7203.T) Lexus.

In its effort to overhaul Lincoln, Ford has also promised seven new vehicles for the brand, starting with the 2011 model-year MKX crossover, which has already been introduced.

(Reporting by Kevin Krolicki, editing by Gerald E. McCormick)

"In the last several months I've stared at our unemployment forecast and come to the conclusion that it's just not coming down nearly as quickly as it should," Chicago Federal Reserve Bank President Charles Evans told the Wall Street Journal.

"This is a far grimmer forecast than we ought to have," he said, for which reason he favors "much more accommodation than we've put in place."

Evans said he is in favor of more asset purchases but added he worries that alone would not be enough, the Journal reported.

He said the Fed should consider ways to push inflation higher in order to bring down the real cost of credit.

He said the Fed might aim to overshoot its informal 2 percent inflation target for a time to make up for lost ground, the Journal reported. New York Fed President William Dudley has also suggested the Fed consider this tool, known as price-level targeting.

"That is a potentially useful policy tool at this point and I definitely think we should study it more," Evans said.

"It seems to me if we could somehow get lower real interest rates so that the amount of excess savings that is taking place relative to investment is lowered, that would be one channel for stimulating the economy," he said.

Evans will be a voter on the Fed's policy-setting Federal Open Market Committee next year.

(Reporting by Kristina Cooke; Editing by James Dalgleish)

The jump in the Institute for Supply Management's services sector index to 53.2 in September from 51.5 in August provided some hope that economic activity picked up in the third quarter. The reading was above the 52.0 median forecast of 74 economists surveyed by Reuters.

A reading above 50 indicates expansion in the sector.

The non-manufacturing sector, which comprises mostly service sector firms, accounts for two-thirds or more of U.S. economic activity.

"The numbers are obviously better than expected," said Vassili Serebriakov, Wells Fargo currency strategist. "We are in a sweet spot where indicators no longer point to a double-dip recession. Instead, they are consistent with a slow recovery."

The index showed services firms took on more workers in September, with the employment component rising to 50.2. Though that reflected only modest hiring, it was above August's reading of 48.2, which shows the sector shed jobs that month.

New orders rose to 54.9 from 52.4.

U.S. stock prices rose after the report and the dollar pared losses against the euro. U.S. Treasuries were little changed, though, as bond investors continued to brace for more monetary easing from the Federal Reserve.

STRUGGLES REMAIN

However, the ISM report's subcomponent business activity or production index slipped to 52.8, its lowest level since January, from 54.4.

Tepid hiring and a resulting high jobless rate continue to weigh on the U.S. economy, even though the recession ended over a year ago, keeping the pace of recovery modest.

The U.S. economy grew at a 1.7 percent annual pace in the second quarter, compared to 3.7 percent between January and March. The jobless rate stood at 9.5 percent through August, and data due Friday is expected to reveal it rose to 9.7 percent in September.

Opposition Republican Party candidates, expected to regain control of the U.S. House at next month's Congressional elections, argue billions of dollars in stimulus spending have failed to jolt the economy back to life and are calling for trimming record government budget deficits.

But some economists and investors say any move toward cutting spending and trimming the fiscal deficit will plunge the country deeper in to the economic doldrums.

In an op-ed published in the London Financial Times newspaper on Tuesday, billionaire investor George Soros said there was "a strong case for further stimulus," adding "to cut government spending at a time of large-scale unemployment would be to ignore the lessons of history."

Federal Reserve officials have indicated that they may resort to pumping more money into the economy, likely via purchases of government and mortgage-backed bonds, if the economic outlook doesn't improve.

The IMF said risks to the financial sector could be reduced if legacy problem assets were cleaned up, if governments improved their fiscal positions and if more clarity were provided on global financial regulation.

"The global financial system is still in a period of significant uncertainty and remains the Achilles' heel of the economic recovery, the IMF said in its semi-annual Global Financial Stability Report.

"The recent turmoil in sovereign debt markets in Europe highlighted increased vulnerabilities of bank and sovereign balance sheets arising from the crisis," the fund added.

The IMF said it had trimmed its estimate of total global bank write-downs related to the financial crisis between 2007 and 2010 to $2.2 trillion from its April estimate of $2.3 trillion, largely due to a drop in securities losses. Banks have recognized more than three-quarters of these write-offs, leaving about $550 billion still to be taken.

However, the fund said banks had made less progress in dealing with near-term funding pressures -- nearly $4 trillion of bank debt needs to be refinanced in the next 24 months.

"Overall, bank balance sheets need to be further bolstered to ensure financial stability against funding shocks and to prevent adverse feedback loops with the real economy," the IMF said.

The forceful policy response to the European debt crisis in April and May of this year this year helped to offset market and liquidity risks to banks. But the sector's stability in the region remains vulnerable to potential market shocks, the IMF said.

In the United States, concerns about household balance sheets and real estate markets amid persistently high unemployment are clouding the outlook for loan quality and bank capital needs.

"Although manageable from a financial stability perspective, a double dip in real estate could have a long lasting impact on the economic recovery," the IMF said.

U.S. banks have had to raise modest amounts of capital, but this largely reflects the shifting of much of the mortgage risks and losses onto Fannie Mae and Freddie Mac, the IMF said. Capital challenges for these government-controlled entities could reactivate a negative global feedback loop between the financial system and the economy.

The fund said it conducted its own "stress test" on the top 40 U.S. banking companies and found that in an adverse scenario where real estate prices fell significantly, these banks would require $13 billion in additional capital to maintain a 4 percent Tier 1 common capital ratio.

"Mid-size banks are particularly vulnerable because it may be more difficult for them to raise capital," the IMF said.

(Reporting by David Lawder; Editing by Neil Stempleman)

Walgreen's shares rose 3.3 percent in early trading as Jefferies & Co raised its rating on the company to "buy" from "hold" before the results were announced and boosted its price target to $45 from $29.

Sales at Walgreen's drugstores open at least a year rose 0.4 percent compared with September 2009, the company said Tuesday -- better than the 1.1 percent decline analysts had expected, according to Thomson Reuters data.

Analysts have said Walgreen has benefited from stronger pricing and fewer markdowns for general merchandise.

Pharmacy same-store sales increased 0.3 percent, much better than the 1.7 percent decline analysts had expected. The pharmacy business accounted for about two-thirds of total sales for the month.

The pharmacy same-store results were down 2.8 percentage points due to generic drug introductions and they took a 0.8 percentage-point hit as fewer people came down with coughs, colds and flu, the company said. Fewer flu shots also meant the pharmacy's same-store sales slipped 0.7 percentage point.

Prescriptions filled rose 0.8 percent on a same-store basis, including 1.4 percentage points due to more patients filling 90-day prescriptions, Walgreen said. Lower incidence of flu hurt same-store prescriptions by 1.5 percentage points, while prescriptions filled was down 1.6 percentage points due to fewer flu shots.

Flu shots administered at pharmacies and clinics in September totaled about 2 million, with nearly 2.25 million flu shots having been administered so far this season.

Kermit Crawford, Walgreens president of pharmacy services, said in a statement that the company faced difficult comparisons versus last year, when demand for flu vaccine was so heavy due to H1N1 pandemic. However, he said the company has already administered nearly 40 percent of the about 5 million shots it provided in the first quarter of last fiscal year when it ran out of vaccine late in the quarter.

Total front-end sales rose 0.7 percent on a same-store basis, better than the 0.1 percent increase analysts had expected.

The company also said it opened 24 stores during September, including four relocations, three acquisitions and four closures. It had 8,065 locations at the end of the month.

Overall September sales rose 5.3 percent to $5.64 billion. Duane Reade stores, acquired in April, contributed 2.8 percentage points to the total increase, but were not included in any same-store results.

Walgreen shares rose 3.3 percent, or $1.12, to $34.23 in early New York Stock Exchange trading.

(Reporting by Ben Klayman, editing by Gerald E. McCormick and Maureen Bavdek)

The Bank of Japan will pump more funds into the struggling economy and keep rates close to zero, while Australia's central bank also kept rates low, in moves that surprised investors. The Nikkei jumped 1.5 percent on the fresh dose of stimulus, leading the way for U.S. market gains.

"We're in a slow and uneven recovery, and it's good to know that governments are going to use their bullets to help prevent a double-dip recession," said Cort Gwon, director of trading strategies and research at FBN Securities in New York.

In a sign of continued struggles for Europe, Moody's may cut Ireland's credit rating again, pointing to the huge bill for cleaning up its banks, a weak recovery and rising borrowing costs.

"I expect the Bank of England to do a similar move as the Bank of Japan, sooner rather than later, and that will have another positive impact on us in the near term," Gwon said.

U.S. Federal Reserve Chairman Ben Bernanke said the Fed's asset purchases lowered borrowing costs and helped the economy, and that more buying could further ease conditions. The Fed bought $1.7 trillion in mortgage-related and Treasury bonds after cutting benchmark rates to near zero to combat the financial crisis and help the economy pull out of a severe recession.

S&P 500 futures rose 2.7 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 18 points and Nasdaq 100 futures rose 6.5 points.

Investors looked ahead to September's Institute for Supply Management's non-manufacturing index, which is expected to be largely unchanged from the prior month but still in expansionary territory. The business activity expectation is 54.0, compared with 54.4 last month. The PMI figure is seen at 52.0, up from 51.5 last month. Anything above 50 represents expansion.

The services sector makes up the bulk of the economy, and traders hope for signs of strength a week after the ISM's manufacturing index showed the sector slowed in September.

Oil futures rose 0.5 percent and neared its highest price since August 6 after Japan lowered rates, which weakened the dollar. Gold hit a record high above $1,326 an ounce.

Fast food chain operator Yum Brands Inc (YUM.N) is on tap to report third-quarter results. The earnings season unofficially kicks off later this week with Alcoa Inc's (AA.N) results after the market close on Thursday.

Chevron Corp (CVX.N) plans to resume quarterly stock buybacks of up to $1 billion as the No. 2 U.S. oil group gains confidence about its finances. Shares of the Dow component rose 0.9 percent to $82.08 in light premarket trading.

U.S. stocks fell Monday as investors used mixed economic data and worries about euro zone debt as a catalyst to shed long positions.

(Editing by Jeffrey Benkoe)

Ireland's services sector shrank for the first time in six months in September, a survey showed separately, following data last week which showed its manufacturing sector was back in recession.

The beleaguered Irish government says it could cost up to 50 billion euros ($68.5 bln) to unravel banks' property losses, driving the cost of Dublin's borrowing to three times that of Germany and prompting renewed jitters about debt elsewhere in the euro zone.

The banks bill will quadruple national debt levels to 155 billion euros or over 100,000 euros per household.

"Ireland's ability to preserve government financial strength faces increased uncertainty," Dietmar Hornung, Moody's lead sovereign analyst for Ireland, said in a statement.

"Recently published data highlight Ireland's weak growth prospects. Fresh uncertainty arises from demand-side weaknesses, particularly the impact of new austerity measures on domestic demand."

Moody's said that a cut to Ireland's Aa2 rating would most likely be by one notch, bringing it into line with its peers Fitch and Standard & Poor's, who have already downgraded Ireland by more.

Moody's last one-notch cut was on July 19 although it also slashed its ratings on the lower-grade debt of nationalized Anglo Irish Bank last month.

On the upside, retail sales and exchequer returns data have indicated some stabilization in consumer demand and shaky public finances.

There is little sign, however, that an economic recovery is going to ease pressure on the government to impose further deep spending cuts in the short-term.

Tuesday's Purchasing Managers' Index showed a fall to 48.8 in September from 52.9 in August due to a sharp drop in new orders, particularly in the domestic market. Business sentiment, while still positive, was the least optimistic since April.

Ireland's central bank warned on Monday that the economy will grind to a virtual halt this year and Prime Minister Brian Cowen will unveil a 4-year plan for tackling the EU's worst budget deficit next month.

Moody's said the plan would be key to its review, adding that it was likely to be prove challenging given that growth forecasts used in the government's own debt projections now look overly optimistic.

(Editing by Patrick Graham)