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The contrasting views over capital controls come amid rising tension between emerging and developed economies over exchange rates, which is expected to be a hot topic at Group of Seven and International Monetary Fund meeting starting on Friday.

Western leaders are worried efforts by emerging economies to weaken their currencies could derail the fragile economic recovery. Officials from developing markets say ultra-low interest rates in rich countries are fuelling massive fund flows into their markets, pushing up their currencies and inflating prices of stocks, property and other assets.

World Bank President Robert Zoellick said emerging nations should consider various measures to control short-term capital flows, according to the Nikkei newspaper.

But IMF deputy managing director, Naoyuki Shinohara, said it was natural and welcome for money to shift into economies with strong growth and policymakers should not try to curb such flows or use intervention to defend specific currency targets.

"When there are occasionally volatile moves in the market, intervention cannot be ruled out," he told Reuters in an interview in Washington on Wednesday.

"But it's totally undesirable for a country to intervene consistently to keep currencies at a certain level."

SLAP ON THE WRIST

Shinohara, who was Japan's currency tsar before assuming the IMF post, warned Tokyo faced a losing battle trying to go against the tide and weaken the yen as monetary conditions in the United States and Europe are expected to remain easy.

"This is not something that Japan can control. If Japan tries to adjust this, it will distort markets," Shinohara said, adding that Tokyo should instead focus on structural reforms and monetary easing to beat deflation.

Zoellick, however, was careful not to judge Japan and other nations which have stepped into markets to weaken their currencies.

"I'm neither endorsing them nor criticizing them," Zoellick said told the Nikkei in an interview published on Thursday on its English website.

Japan sold the yen in the currency market for the first time in six years last month, The currency drifted back up, hitting a 15-year high against the dollar on Wednesday.

Prime Minister Naoto Kan reiterated that sharp currency moves cannot be ignored and the government would act decisively as needed.

Signs of a "currency war" are growing as major industrial nations want to keep their exchange rates weak to help their struggling exporters while emerging economies such as Brazil and South Korea are taking or planning steps to curb capital inflows.

After data overnight showed U.S. private sector employment surprisingly shrank in September, the potential has increased for the official payrolls report to reflect weakness and accelerate what has become the cheap money trade: sell dollars, buy bonds, equities and gold.

This trade has been driven by expectations the Federal Reserve at its policy meeting next month will shift toward quantitative easing (QE), effectively flooding the financial system with cheaply borrowed cash.

The greater chance of a soft U.S. payrolls number made the dollar's disadvantages all the more stark, especially after data showed Australian employment in September was more than double forecasts, driving the Australian dollar to the highest since July 2008 against the dollar.

In equities, Japan's Nikkei share average .N225 gained 0.1 percent, adding to the week's 3.3 percent rise. The index is outperforming the U.S. S&P 500 index .SPX and the FTSEurofirst 300 index .FTEU3, which are both up 1.2 percent so far this week.

The MSCI index of Asia Pacific stocks outside Japan was up 0.25 percent .MIAPJ0000PUS to the highest since June 2008.

The 11.6 percent rise in the index last month exceeded the all-country world index by two percentage points and has been driven by the consumer discretionary, energy, industrial and materials sectors.

Investors remain focused on the U.S. dollar, which fell 8.5 percent against a basket of major currencies in the last quarter.

Goldman Sachs analysts revised their forecasts for the dollar downward, expecting Asian currencies to shoulder more of the burden of currency strength in coming months.

"The combination of weaker growth, more QE, FX policy pressure on Asia for more currency appreciation and widening external imbalances all point in the same direction: broad USD weakness. And this is likely to remain the dominant theme," the analysts said in a note.

The euro has benefited from the dollar's weakness and hit an eight-month high of $1.3949 overnight. It was down 0.1 percent on the day at $1.3910.

The European Central Bank will meet to review policy later though no changes are expected. Dealers will listen for any comment on the euro's rapid 7.5 percent gain last month.

The dollar was trading at 82.90 yen, not far from the 15-year low of 82.75 yen plumbed on Wednesday.

Precious metals have been other beneficiaries of dollar weakness. Gold was largely unchanged on the day after touching a record high of $1,349.80 an ounce on Wednesday. Since August, gold has risen 14 percent.

(Editing by Miral Fahmy)

The newspaper said founder Paul Castel's reduced involvement in the company signals that the next generation may be open to offers, but added that until recently there had been no indication that the family might sell.

SABMiller is the world's second largest brewer after AB InBev (ABI.BR) and brews Peroni, Miller Lite and Grolsch.

SABMiller and Castel were not immediately reachable for comment.

As recently as August, SABMiller was speculated to be looking at the beer operations of Australia's Foster's Group (FGL.AX) which is valued at more than $10 billion.

In Africa, SABMiller has brewing and beverage operations in 14 countries, and a presence in a further 19 nations, largely in West Africa, through a strategic alliance with Castel.

The global brewing industry has seen a number of significant merger and acquisition deals in recent years.

Belgium's InBev acquired St. Louis-based Anheuser-Busch in 2008, creating the world's largest brewer with brands including Stella Artois, Beck's and Bud Light.

Japanese brewer Kirin Holdings (2503.T), faced with a shrinking beer market at home, has been on an aggressive overseas expansion drive -- in July it bought a stake in beverage and property conglomerate Fraser & Neave (FRNM.SI) for $953 million.

(Reporting by Karolina Tagaris; editing by Dhara Ranasinghe)

The moves come at a time when top GE officials have said the company could have up to $30 billion available for takeovers over the next few years, marking a shift in stance from the company's defensive posture over the past few years.

GE reached a $3 billion deal to buy Dresser Inc DRESS.UL, a maker of gas engines used by oil and gas production equipment.

"Dresser has a global franchise and brand with 60 percent of revenues outside of North America, which will be accelerated by GE's global footprint," said John Krenicki, a GE vice chairman and chief executive of the company's energy infrastructure division.

Its GE Capital finance arm, which had been its weakest point through the recession had bought $1.6 billion of retail credit assets from Citigroup Inc (C.N).

But GE also said British oilfield services Wellstream Holdings (WSML.L) rejected a $1.2 billion (755 million pound) takeover approach.

GE has been an active acquirer over most of the past decade, and CEO Jeff Immelt has said the company will focus on deals sized at $1 billion to $3 billion in areas that complement its core industrial and finance franchises.

The company is in the process of selling its NBC Universal media business to No. 1 U.S. cable operator Comcast Corp (CMCSA.O).

The payoff of the company's latest round of deals is yet to be seen, said Peter Klein, senior portfolio manager at Fifth Third Asset Management in Cleveland, Ohio, which holds GE shares.

"Are they going to get it right? Are they going to pay the right price? It depends how eager they are to add on assets," Klein said.

GE shares were up 1 percent at $16.68 on the New York Stock Exchange.

(Reporting by Scott Malone; Editing by Derek Caney)

The August figure was originally reported as a loss of 10,000.

The median of estimates from 38 economists surveyed by Reuters for the ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, was for a rise of 24,000 private-sector jobs in September.

The ADP figures come ahead of the government's much more comprehensive labor market report on Friday, which includes both public and private sector employment.

That report is expected to show overall nonfarm payrolls were unchanged in September, based on a Reuters poll of analysts, but a rise in private payrolls of 75,000.

Economists often refer to the ADP report to fine-tune their expectations for the payrolls numbers, though it is not always accurate in predicting the outcome.

(Reporting by Leah Schnurr, Editing by Chizu Nomiyama)

In a sober assessment of the U.S. outlook, the IMF pulled down its estimate for 2010 growth to 2.6 percent from the 3.3 percent it published in July and said gross domestic product or GDP will expand 2.3 percent in 2011 instead of 2.9 percent.

"The most likely prospect for the U.S. economy is for a continued but slow recovery, with growth far weaker than in previous recoveries, considering the depth of the recession," the IMF said in its World Economic Outlook published ahead of weekend semi-annual meetings of it and the World Bank.

The IMF said the main reason the U.S. recovery is so weak is that consumer spending is sluggish and suggests it is little wonder that is the case. Falling home prices have reduced household wealth, 9.6 percent of the workforce is unemployed, banks won't lend and people are scared into saving.

It says the gap between actual and potential economic output will be a lingering drag on the pace of recovery.

"The unemployment rate is therefore expected to remain stubbornly high," it warns, which further hinders consumption spending that is the largest component of U.S. GDP.

"Risks to the outlook remain elevated and are tilted to the downside," the IMF said, noting that real estate markets are "still fragile" and soaring government debt has created worry in financial markets.

It says the government must lay the groundwork in 2011 for fiscal consolidation to reduce its indebtedness. The IMF said the Obama administration had set the right direction in its mid-session economic review by proposing fiscal tightening of about 1 percent of GDP.

The IMF said there was "a tail risk of deflation" arising from soft consumer prices, weak labor markets and consumers' increased wish to save instead of spend.

Nonetheless, it urged that the Federal Reserve maintain its policy of very low interest rates to try to spur subpar growth and to offset lingering financial strains.

The U.S. central bank has held overnight interest rates at nearly zero for close to two years and Fed Chairman Ben Bernanke hinted this week that it could resume asset purchases to inject more liquidity into the economy in hope of priming more lending by banks to speed up recovery.

In contrast with the United States, neighboring Canada's economy remains "relatively buoyant" with both household balance sheets and banks in good shape, the IMF said.

The main concerns for Canada are external ones, arising from the possibility of lower commodity prices, mainly for oil and minerals, and the risk that the United States, its key export market, could slow down more than anticipated, the IMF said.

(Reporting by Glenn Somerville; Editing by Andrea Ricci)

Investors are expecting private employers to add 24,000 jobs in September, according to the ADP Employer Services report, which is scheduled for release at 8:15 a.m.. In August, private employers unexpectedly cut 10,000 jobs.

The number is a precursor for Friday's closely watched non-farm payroll report, which is expected to be unchanged in September as government layoffs were offset by private hiring.

Dow component Johnson & Johnson Inc (JNJ.N) on Wednesday said Crucell (CRCL.AS) will recommend that shareholders accept J&J's $2.4 billion takeover bid for the Dutch biotech company.

Many analysts see increased M&A activity as a sign that in using their record levels of cash, companies are becoming more confident.

Costco Wholesale Corp (COST.O) posted fourth-quarter earnings that beat expectations while September same-store sales, excluding fuel, rose 4 percent.

Late Tuesday, Yum Brands Inc (YUM.N) reported adjusted third-quarter earnings that beat expectations and raised its full-year earnings outlook, helped by strong sales in China.

Marriott International (MAR.N), Monsanto Co (MON.N) and Constellation Brands In (STZ.N) are also on tap to report results on Wednesday.

S&P 500 futures rose 3.2 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 51 points and Nasdaq 100 futures rose 5.25 points.

Japan's Nikkei average surged 1.8 percent to close at its highest level in two months as investors continued to welcome the Bank of Japan's surprise interest rate cut the day before, while European shares were up 0.8 percent in morning trade, adding to the previous session on hopes of further monetary stimulus. .T .EU

The dollar stayed near eight-month lows on the euro and edged toward a 15-year trough on the yen on Wednesday, hurt by expectations of U.S. Federal Reserve easing after Japan lined up its own reflation tools.

U.S. stocks rallied to near a five-month high on Tuesday on growing conviction central banks will do even more to bolster struggling economies worldwide.

(Editing by W Simon )

Concerns that the Federal Reserve is about to embark on another round of policy easing that could weaken the dollar, tallied with China's polite refusal to let its yuan rise fast, has pushed currencies to the top of the agenda at Friday's meeting of finance chiefs from the Group of Seven nations.

Few hold out much hope of any meaningful agreement at the G7 or the International Monetary Fund meeting that follows.

"It's doing nothing for the American economy, but it's causing chaos over the rest of the world. It's a very strange policy that they are pursuing," Nobel economics laureate Joseph Stiglitz said of U.S. policy.

The dollar extended its losses on Wednesday, falling to an 8-1/2 month low against a basket of currencies and edging toward a 15-year trough versus the yen.

That trend prompted Japan to intervene to weaken the yen last month and some emerging economies have followed suit or are threatening to.

"There is clearly the idea beginning to circulate that currencies can be used as a policy weapon," IMF Managing Director Dominique Strauss-Kahn was quoted as saying in Wednesday's edition of the Financial Times.

"Translated into action, such an idea would represent a very serious risk to the global recovery ... Any such approach would have a negative and very damaging longer-run impact," he said.

The IMF, which holds its twice-yearly meeting in Washington this weekend, is also expected to discuss foreign exchange moves as part of its mission to get countries working for balanced global growth.

Brendan Brown, economist at Mitsubishi UFJ Securities International in London, said the Fund, which has the United States as its biggest stakeholder, would not try to prevent further U.S. monetary easing or a resulting slide of the dollar.

"That Washington institution has failed in its central mission to prevent currency war," he wrote in a report.

CHINA UNMOVED

Euro zone policymakers urged Chinese premier Wen Jiabao on Tuesday to allow the yuan to rise more rapidly, but he politely rebuffed them, repeating Beijing's standard line on seeking currency stability.

Wen was due to hold a joint news conference with EU leaders in Brussels at 1515 GMT.

Policymakers have highlighted the issue of global imbalances for years, with fundamental problems seen as the dollar's global dominance, China's overvalued yuan and Germany's lack of domestic consumption.