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Former Federal Reserve Chairman Alan Greenspan said the United States was pursuing a policy of weakening the dollar, adding fuel to an already heated debate over the Federal Reserve's bond-buying spree to revive the economy.

The Group of 20 club of rich and emerging economies had hoped to use the summit to soothe tensions over foreign exchange rates that have been created by sharply divergent growth rates. U.S. President Barack Obama urged his peers to put aside differences and follow through on previous agreements to even out imbalances between cash-rich exporting nations and debt-burdened importers.

Thursday's agenda included dozens of bilateral meetings as well as ceremonies to mark the Veterans Day holiday. The summit officially kicks off with a working dinner Thursday night and a full day of meetings on Friday.

Behind the scenes, negotiators squabbled over the language in a closing statement to be issued at the summit's conclusion on Friday. The final version may not venture far beyond agreements reached by G20 finance ministers last month, yet it was still proving difficult to agree on the wording.

Kim Yoon-kyung, spokesman for Korea's G20 summit committee, said deputies made progress on less controversial matters such as reforming the International Monetary Fund but were far apart on core issues of currencies and imbalances.

"The gap was so wide they were unable to agree on today's meeting schedule," he said at a press briefing.

CONFLICT ON THE MENU

South Korean President Lee Myung-bak said a "little bit" of progress had been made since the October finance ministers meeting in Gyeongju, South Korea, but deep divisions remained over how best to reduce current account imbalances.

Leaders will discuss it at Thursday's dinner, he said.

"We had reached an agreement (at Gyeongju) despite skepticism that no agreement would be reached because of a divide in opinion between U.S., China, Europe and other countries," he said, adding that the leaders would back the idea of "indicative guidelines" for the reduction of current account imbalances.

Ireland's deepening debt troubles posed another potential problem for the G20, which promoted this summit under the banner of "Shared Growth Beyond Crisis." Ireland's fragile government is battling to prove it does not need a Greek-style rescue to help it reduce the worst budget deficit in Europe.

Protests were set to intensify in the Korean capital on Thursday, although police set up a security corridor around the summit site and planned to keep disruptions far from the leaders.

There have been hundreds of applications for rallies, mostly by small groups, with a mass rally involving possibly tens of thousands scheduled for Thursday afternoon.

The biggest battle inside the summit is over the U.S. Fed's easy money policy. The central bank's announcement last week that it plans to buy another $600 billion in government bonds drew sharp rebukes from many G20 members who said the United States was ignoring consequences abroad.

Forecasts for quarterly and yearly revenue fell far short of Wall Street's expectations, a big disappointment for a company known for solid management and seen as a top beneficiary of the surge in global wireless and Internet traffic.

"It was a surprising guide down," said Jefferies & Co analyst William Choi. "They're a well run company, well respected, they typically set guidance and meet. For them to guide down like this is puzzling."

John Chambers, one of the longest-serving CEOs in Silicon Valley whose views on economic trends are well regarded, cautioned of "short-term challenges" in Europe and public sector spending, as well as among its most important customer segment: service providers.

"First of all, our view on this guidance is, we are disappointed," he said.

Chambers forecast revenue growth of 9-12 percent in fiscal 2011, well below the 13.1 percent analysts had expected on average.

A projection for 3-5 percent revenue growth in the fiscal second quarter -- the current period -- also fell far short of Wall Street's expectations for 13 percent.

The outlook from the tech-sector bellwether sent shares in fellow industry heavyweights down in extended trading. Microsoft Corp (MSFT.O) fell 1.6 percent, IBM (IBM.N) slipped 1.2 percent, and Intel Corp (INTC.O) dropped 2.1 percent.

"We are obviously not projecting growth as fast as we would like over the next several quarters," Chambers told analysts on a conference call. He said it "reflects, in our opinion, the reality in public sector spending, some challenges in parts of our service provider market, and one or two areas we should improve our execution."

MARKET SPOOKED AGAIN

While Cisco has a good track record of beating Wall Street's expectations, it wouldn't be the first time its outlook and CEO's comments spooked the market.

Chambers' warning last quarter about "unusual uncertainty" among customers had also sparked a sell-off.

Cisco's customers, who cut back during the recession, have recently begun spending more on their network infrastructure, with phone companies buying more advanced equipment to handle growing smartphone traffic and corporate clients upgrading their data center equipment.

But the pace of recovery has been in doubt, with both companies and government agencies trying to control their costs by trying to do more with less.

Cisco said revenue in the fiscal first quarter ended October 30, rose 19 percent from a year earlier to $10.75 billion. That was roughly in line with the market's average forecast of $10.74 billion, according to Thomson Reuters I/B/E/S.

Cisco said revenue in the fiscal first quarter ended October 30, rose to $10.75 billion from $9.02 billion a year earlier. Analysts on average expected $10.74 billion, according to Thomson Reuters I/B/E/S.

Net profit rose to $1.9 billion, or 34 cents a share, from $1.8 billion, or 30 cents a share, a year earlier. Excluding items, earnings per share rose to 42 cents, beating Wall Street's expectations by 2 cents.

Cisco's customers who cut back during the recession have recently begun spending more on their network infrastructure, with phone companies buying more advanced equipment to handle growing smartphone traffic and corporate clients upgrading their data center equipment.

The pace of the recovery had been in doubt, particularly after Cisco Chief Executive John Chambers spooked tech investors last quarter by citing "unusual uncertainty" among customers.

Cisco shares, which had risen in recent weeks, fell around 1.6 percent after-hours. They closed at $24.49 earlier on Wednesday.

(Reporting by Ritsuko Ando; Editing by Bernard Orr)

Taking aim at some of Washington's most politically explosive fiscal issues, the draft proposals were portrayed as achieving $4 trillion in deficit reduction through 2020, but they got a mixed reception from other commission members.

With a final report due from the panel on December 1, Democratic Representative Jan Schakowsky, a commission member, told reporters: "It's not a proposal I could support."

Republican Representative Paul Ryan, also a commission member, said: "There are things in here I like, things I don't like. This is a serious, impressive effort. It's a good start ... We've got a long way to go."

Co-chairmen Erskine Bowles and Alan Simpson also called for changes to the mortgage interest tax deduction, cuts in defense spending, and a reduced base rate for corporate taxes, according to the draft proposal distributed to reporters.

The proposal suggests raising the Social Security retirement age to 68 by 2050 and 69 by 2075 with a "hardship exception" for certain occupations where that would be unrealistic, the draft said.

Bowles, a Democrat, was chief of staff for President Bill Clinton. Simpson is a retired Republican senator. The two were named to head the commission this year by President Barack Obama in a move meant to show the White House is serious about tackling the deficit.

The two also proposed phasing in budget cuts beginning in fiscal 2012 and bringing down federal spending eventually to 21 percent of gross domestic product.

Fourteen of the panel's 18 members are supposed to approve a final report for Obama containing recommendations to balance the budget. But analysts expect it to be difficult to reach that kind of consensus and predict the commission may end up issuing a less conclusive report.

DEFICIT REDUCTION TARGETS

The commission's proposal came as a separate, private-sector panel called for a shake-up of the budget process that would set clear targets for reducing red ink and impose spending cuts and tax increases if targets were missed.

The recommendation by the Peterson-Pew Commission on Budget Reform, a balanced-budget advocacy group that has no official government role, recommended that the president and Congress be required to respect deficit-reduction targets and that serious consequences be levied for falling short.

If a budget enacted by Congress missed a target, the president could propose cuts to bring it in line, the Peterson-Pew Commission recommended.

"If the target were still missed, spending reductions and tax increases would be imposed through automatic trigger mechanisms," the Peterson-Pew Commission said.

The report from Peterson-Pew -- one of a handful of panels studying the deficit problem -- comes days after an election that swept Republicans to power in the House of Representatives partly on a wave of voter outrage over the $1.3 trillion deficit and the national debt of more than $13.6 trillion.

Shares of Mizuho Financial Group and other Japanese banks surged on Wednesday after a Financial Times report saying they -- and others -- may be exempt from new global rules under consideration that could require a further boost of capital.

The Group of 20 leading economies (G20) summit in Seoul on Thursday and Friday will endorse a set of tough new bank capital rules known as Basel III in what will be a major regulatory milestone in the three-year old financial crisis.

But the leaders had also hoped to approve a package of extra measures for the biggest banks so that taxpayers will not have to be called on again to bail them out in the next crisis.

Disagreements over whether capital surcharges should be included had already pushed back its finalization well into next year but it emerged on Wednesday that key elements may also be watered down so that local supervisors have far more wriggle room in implementing it.

"It is very well possible that countries will have the freedom to not demand extra capital requirements for all systemic banks," said Nout Wellink, head of the Dutch central bank and chairman of the Basel Committee that authored Basel III.

"There will be a complete package. There could be some freedom of choice but I am not yet sure. Some freedom of choice with a minimum package to comply with," he told Dutch members of parliament.

Finance experts were dismayed, saying it risked derailing the broader push by global regulators to crack down on "too big to fail" banks.

"This is something completely new and to some extent a surprise. Banks have been lobbying their countries against higher capital requirements for systemically important institutions," said Harald Benink, professor of finance at Tilburg University in the Netherlands.

SPOT THE SIFI

The Basel Committee agreed in September that systemically important financial institutions (SIFIs) should have extra "loss absorption capacity" -- whether through capital surcharges or loading up on hybrid bonds like contingent capital (CoCos).

Since then Japan, France and Germany have spoken out against imposing a capital surcharge on their big banks, a move Switzerland, Britain and the United States appear to favor.

Behind the scenes there are been fierce arguments over which of the world's biggest banks should be deemed a SIFI and thus be subject to the extra safeguards.

"We are drawing up a list of systemic banks which will be ready by the end of this year," Wellink said. "In the Basel Committee we are developing a methodology to identify systemic banks. The definitions are based on the size of interconnectedness in the system, multilateral relations and that another bank cannot take over the bank," he said.

Citing people briefed on the agenda for the G20 summit in Seoul, the FT said officials had decided that regulators should focus on big banks with global operations, exempting domestically focused lenders such as those in China and Japan from the stricter regulations.

GM said it expected to post solidly profitable results for 2010, its first full-year profit since 2004. A large part of that profit could be attributed to North America, which formerly had posted deep losses.

The automaker reported increased cash earnings in North America for a third consecutive quarter, with its international results flat to up slightly and a bigger loss in Europe.

"We know we have much work to do, we still have to fix Europe," Chief Executive Dan Akerson said in a conference call.

The automaker earlier in November released details for its planned IPO that could include the sale of up to $13 billion of common and preferred shares and would allow the U.S. Treasury to reduce its stake in GM.

GM executives have started an investor road show to support the IPO plans and Akerson and Chief Financial Officer Chris Liddell did not take questions after a presentation on third-quarter results.

In North America, GM's earnings increase in the third quarter was driven mainly by a reduction in incentives and increases in sales from showrooms over the prior three months.

The automaker also reported an increase in truck production that supported the results. GM expects to build more cars in the fourth quarter with the introduction of the Chevrolet Cruze compact car.

GM's profit met the expected range it outlined last week when it released details of its plans for an offering of common and preferred shares. The automaker reported earnings per share of $1.20 for the quarter.

GM reported earnings before interest and tax of $2.3 billion overall, with $2.1 billion from North America. It also generated free cash flow of $1.4 billion.

GM posted revenue of $34.1 billion in the third quarter. GM emerged from its government-funded bankruptcy in July 2009, making year-ago comparisons less relevant.

GM's profit topped U.S. No. 2 rival Ford Motor Co's (F.N) $1.7 billion third-quarter profit, and Chrysler's $84 million net loss for the quarter.

GM expects earnings before interest and tax to be significantly lower in the fourth quarter than it was through the first three quarters due to vehicle introduction costs and spending for future products among other expenses.

The automaker expects to take a $700 million noncash charge in the fourth quarter in connection with a plan to acquire the U.S. Treasury's holdings of GM preferred shares.

The U.S. automaker reported losses totaling about $88 billion from 2005 to 2009, when it fell into bankruptcy, as losses mounted in North America.

(Reporting by David Bailey, editing by Dave Zimmerman)

Investors were cautious after European stocks fell in morning trade, tracking losses in commodity prices that were sparked by weak Chinese imports data and strength in the U.S. dollar.

The dollar rose marginally to hit its highest levels since late October against a basket of major currencies .DXY as the euro extended its losses over worries about euro zone sovereign debt.

Oil fell for a second day in a row as a result of a dollar rally, reining in the bullish effect of a surprise drop in inventories in top consumer the United States.

China's central bank also rattled investors by ordering some banks to boost reserve requirements by 0.5 of a percentage point in an apparent move to curb rapid credit growth, three industry sources told Reuters on Wednesday.

In a letter obtained by Reuters, President Obama told the G20 summit in Seoul, which is struggling to cool global currency tensions, that a strong economy is the most important contribution the United States can make to the global recovery.

Shares of financial institutions will be in focus after Britain's largest insurer Prudential Plc (PRU.L) on Wednesday reported a better-than-expected 17 percent rise in third-quarter sales, helped by strong growth in its flagship Asian markets.

A Boeing (BA.N) 787 test flight made an emergency landing on Tuesday in Texas with smoke in the cabin, the first incident of its kind, putting additional scrutiny on the already delayed program.

Lenovo (0992.HK), the world's No.4 PC brand, posted its best profit growth in four quarters, helped by its mature markets returning to profitability but warned that growth in its key China market could slow.

Key economic data set to be released on Wednesday includes U.S. weekly jobless claims and the international trade balance for September.

On the earnings front Cisco Systems (CSCO.O), Macy's Inc. (M.N) and Polo Ralph Lauren Corp. (RL.N) are all expected to report profits, through Ralph Lauren's are expected to be down compared to last year.

European shares fell on Wednesday from two-year highs on the back of the Chinese import data, led by mining stocks, but a rise in defensive utilities shares helped limit the drop.

Wall Street fell for a second day on Tuesday as selling accelerated into the close, led by sharp losses in bank and metal stocks.

The Dow Jones industrial average .DJI slid 60.09 points, or 0.53 percent, to 11,346.75. The Standard & Poor's 500 Index .SPX dropped 9.85 points, or 0.81 percent, to 1,213.40. The Nasdaq Composite Index .IXIC lost 17.07 points, or 0.66 percent, to close at 2,562.98.

(Editing by Jon Loades-Carter)