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The expansion is in response to surging demand from investors, who had put in orders worth of $70 billion for GM's common shares by late on Tuesday, the sources said.

GM's initial public offering, which will reduce the U.S. Treasury to a minority shareholder in the top U.S. automaker, could raise nearly $23 billion if underwriters exercise the full overallotment option. The largest U.S. IPO so far is Visa Inc's (V.N) $19.7 billion stock sale in 2008.

The increased size of the IPO reflects renewed investor confidence in the world's No. 2 automaker less than a year and a half after dwindling cash and falling sales pushed it into a bankruptcy funded by the Obama administration.

GM plans to sell 478 million common shares for $32 to $33 each, raising about $15.5 billion at the mid-point, people familiar with the situation said.

GM earlier on Tuesday increased the size of its preferred stock offering by $1 billion to $4 billion in a move that will strengthen its balance sheet by paying down pension debt -- one of the concerns investors had cited heading into the IPO.

Including an overallotment provision for both common and preferred shares, the GM deal is now set to raise about $22.7 billion if it prices at the high end of the new price range.

The final terms for GM's IPO are expected on Wednesday. The stock is set to begin trading on the New York and Toronto stock exchanges on Thursday.

GM plans to file an amended S-1 document with the U.S. Securities and Exchanges Commission detailing the increased number of shares on offer, the sources said.

Teetering on the brink of failure before the government intervention in 2009, the U.S. auto industry has come through the punishing downturn of the past two years with sharply lower costs and higher profit potential, analysts said.

CASH COW?

"I think part of it may be the market looking at a restructured General Motors and thinking this can be a cash cow again under certain market conditions," said Brad Coulter, a director at Michigan-based advisory firm O'Keefe & Associates.

"If you get back to an even moderate market of 13, 14, 15 million units, I think the market is expecting GM -- and you are seeing it with Ford as well -- to be making a lot of money."

U.S. auto sales are expected to rise to 11.5 million units this year from 10.4 million last year, and are widely seen recovering to the pre-recession level of more than 15 million units in the next few years.

If the GM IPO performs well, it could trigger a shift in public sentiment about the Obama administration's unpopular bailout of the U.S. auto industry in 2009, Coulter said.

The call for a settlement by Bank of America CEO Brian Moynihan was followed by comments from Iowa Attorney General Tom Miller, who told a Senate hearing that a settlement with lenders was still months off.

"We're thinking in terms of months rather than a year or longer but it depends really on how far we get," said Miller, who is heading up a probe by all 50 state attorneys general.

Banks are accused of having used "robo-signers" to sign hundreds of foreclosure documents per day without proper legal review. The allegations that banks' use of shoddy paperwork resulted in struggling borrowers being illegally evicted from their homes reignited public anger with banks that received billions of dollars in taxpayer aid during the financial crisis.

In addition to the probe by the 50 states, major lenders are facing investigations by the U.S. Justice Department and federal bank regulators.

Miller, testifying before the Senate Banking Committee on issues concerning mortgage servicing and foreclosures, said the timeline for a settlement could stretch as attorneys general consider whether to expand their probe.

Earlier on Tuesday, CNBC reported that Miller was getting close to a settlement with banks. After the hearing, the Iowa attorney general denied that was the case, saying "we are a long ways from an agreement."

Miller said talks with lenders have been "productive." He said settlements could include financial penalties and a pledge that banks do away with pursuing foreclosures on an individual borrower at the same time that efforts at a loan modification are under way.

Lawmakers, while pressing for more modifications, specifically urged lenders to get rid of this so-called "dual-track" approach.

"It seems like if there's a good faith modification process under way, the foreclosure process ought to be shut down," said Senator Jeff Merkley, a Democrat from Oregon.

But Barbara Desoer, the home loans chief of Bank of America, said her bank has its hands tied in situations when it is only the servicer of a loan, not an investor, and therefore must go forward with foreclosure proceedings against delinquent borrowers.

Nonetheless, Desoer told the committee that Bank of America, the largest U.S. mortgage servicer, is working with state attorneys general on this "dual track" issue.

"We are talking to the state attorneys general under Attorney General Miller's leadership to try to amend that process because we understand how confusing it is," Desoer said.

Moynihan, speaking earlier on Tuesday at the Bank of America Merrill Lynch Financial Services conference in New York, said the industry and lawmakers need to look at streamlining foreclosures, but expressed urgency at wrapping up the joint 50-state probe.

"It is in everyone's best interest to get this settled and behind us," Moynihan said.

The developments, especially questions about Ireland's financial stability, caused a spike in the U.S. dollar, which hit commodity prices. That in turn sent equities lower, with natural resources companies leading the way down.

"Is dollar strength just a correction in a larger trend of dollar weakness, or are we beginning to turn around here?" said Bill Strazzullo, partner and chief investment strategist at Bell Curve Trading in Boston.

"If it looks like the U.S. dollar is finally stabilizing here and gaining its footing, we're going to have a good-sized pullback in equities and commodities markets."

Asset classes have become increasingly entwined since investors placed bets ahead of the Federal Reserve's announcement of further quantitative easing. Now, many investors that bet on Fed stimulus are unwinding those risky positions.

One result was a slide in resource stocks, such as Alcoa Inc (AA.N), which fell 2.8 percent to $13.03, and Exxon Mobil Corp (XOM.N), which dropped 2.2 percent to $68.94. U.S. crude oil futures settled 3 percent lower at $82.34 a barrel, gold and metal prices fell and the dollar index jumped 0.9 percent.

The S&P materials sector .GSPM gave up 2.2 percent. Tech shares .GSPT also stumbled, falling 1.9 percent, as investors fled for safety.

The Dow Jones industrial average .DJI dropped 178.47 points, or 1.59 percent, to 11,023.50. The Standard & Poor's 500 Index .SPX shed 19.41 points, or 1.62 percent, to 1,178.34. The Nasdaq Composite Index .IXIC gave up 43.98 points, or 1.75 percent, at 2,469.84.

Ireland, which is grappling with a battered banking sector, said it was discussing stabilization measures with its European partners, while China is expected to unveil food price controls and crack down on commodity speculation to contain inflationary pressure.

The Chinese media reports increased expectations that China will further tighten monetary policy to help fight inflation.

The CBOE Volatility Index .VIX, known as Wall Street's fear gauge, climbed 11.8 percent to 22.58, its highest close in more than a month.

The S&P found support around the 1,176 level, which is roughly the 23.6 percent Fibonacci retracement of the benchmark's recent rally from the 2010 low in July to its more than two-year high hit earlier this month.

After rallying nearly 13 percent through September and October, the S&P 500 has given up nearly 4 percent since November 5.

"If we don't see the S&P back above 1,200 in the next couple days, then I think we're potentially putting in some sort of top here," said Strazzullo.

Continued speculation over whether the Federal Reserve will spend all of the $600 billion it had earmarked for its latest round of quantitative easing also pressured the market.

The Labor Department said on Tuesday the core Producer Price Index, which excludes food and energy costs, fell 0.6 percent -- the biggest drop since July 2006 -- after edging up 0.1 percent in September.

Economists polled by Reuters had expected core PPI to gain 0.1 percent in October.

The headline PPI index rose 0.4 percent last month, well below economists' expectations for a 0.8 percent increase, after gaining 0.4 percent in September.

Concerns that low inflation could spiral into a damaging phase of deflation prompted the Fed this month to ease monetary policy further, a step that will see it buy $600 billion worth of government bonds through the middle of 2011.

"There's been some questions about whether the Fed might ease off or not and bonds have fallen somewhat in the last few days. This data could go against this somewhat," said Sean Incremona, an economist at 4Cast in New York.

U.S. stock index futures briefly added to losses, while the dollar fell against the yen. U.S. Treasury debt prices extended gains.

Core PPI in October was depressed by a 4.3 percent drop in the price of light motor trucks, which was the largest since October 2006. Prices for passenger cars also fell 3.0 percent last month, the biggest decline since July 2006.

The fall in vehicle prices likely reflected the annual introduction of new models into the PPI.

In the 12 months to October, core producer prices rose 1.5 percent after increasing 1.6 percent the prior month.

Though sluggish demand is keeping inflation subdued, there are signs the economy is regaining some strength after losing momentum in the summer.

Wal-Mart Stores Inc (WMT.N), the world's largest retailer on Tuesday posted a higher quarterly profit and raised its full-year earnings forecast, but U.S. same-store sales declined in a sign of the pressure on consumers.

However, Chief Executive Officer Mike Duke said he expected the U.S. performance to improve in the fourth quarter.

Home improvement chain Home Depot Inc (HD.N) also reported results on Tuesday. While its earnings were higher than expected, it softened its full-year sales forecast to reflect the reticence of consumers to take on expensive renovation projects.

(Reporting by Lucia Mutikani, Additional reporting by Karen Brettell in New York, Editing by Andrea Ricci)

Sales at U.S. Wal-Mart stores open at least a year fell 1.3 percent, the sixth consecutive quarterly decline at the world's largest retailer.

Sales at Wal-Mart's U.S. discount stores have suffered from the company's missteps in terms of merchandise selection and promotion. In addition, high unemployment has forced Wal-Mart's lower-income customers to cut back on even some essential items or to search out lower prices at dollar stores.

Wal-Mart said profit in the third quarter ended October 31 was $3.44 billion, or 95 cents a share, compared with $3.15 billion, or 82 cents a share, a year earlier. The latest results included a tax benefit of 5 cents per share.

Net sales rose 2.6 percent to $101.2 billion.

Earnings per share, excluding the tax benefit, were in line with analysts' average forecast of 90 cents, according to Thomson Reuters I/B/E/S.

Wal-Mart said it now expects fiscal 2011 earnings per share of $4.08 to $4.12, up from a previous forecast of $3.95 to $4.05, reflecting the tax benefit and an expectation for a solid operational performance in its fourth quarter.

(Reporting by Michele Gershberg and Brad Dorfman; Editing by Lisa Von Ahn)

Investors eagerly awaited quarterly results from Wal-Mart Stores Inc (WMT.N), the world's biggest retailer.

A top U.S. Federal Reserve official defended the Fed's controversial bond-buying program on Tuesday, saying it could be years before a pullback from easy-money policies is warranted. "This exit could be years away," New York Federal Reserve President William Dudley said an interview on CNBC. A transcript of the interview was made public.

China's key stock index fell by 4 percent on Tuesday, driven by retail investors unnerved by rumors of more aggressive action from Chinese authorities to control inflation.

Official media reported China's National Development and Reform Commission, the country's top planning agency, was also preparing a series of actions to rein in food costs, while consumer prices have been rising at their fastest in more than two years.

European shares were down 1 percent in morning trade, led lower by mining companies, hit by concern over policy tightening in China and jitters over Ireland's debt crisis.

Investors were keeping a close eye on Ireland. Meeting in Brussels on Tuesday, euro zone finance ministers will try to find a way to ease Ireland's debt crisis, while the country continues to resist pressure to seek a state bailout by signaling that only its banks may need help.

The dollar touched a six-week high against the euro on Tuesday, supported by a rise in U.S. Treasury yields, but later retreated as officials from the Federal Reserve sounded a dovish tone and defended its easing policy.

Oil fell toward $84, weighed down by an expected rise in U.S. crude stockpiles, while the dollar touched a six-week high against the euro as investors cut exposure to commodities and risk.

Shares of Nordstrom (JWN.N) fell in extended trading on Monday following quarterly results.

German sports goods company Adidas AG (ADSGn.DE) plans to open more than 2,500 stores in smaller Chinese cities by 2015, banking on rising incomes to turnaround its fortunes there.

Economic data on Tuesday includes the producer price index for October, industrial production for October and the National Association of Home Builders survey for November, while apart from Wal-Mart, companies expected to report quarterly results include Abercrombie & Fitch (ANF.N) and Home Depot (HD.N).

U.S. stocks slipped on Monday as concerns the Federal Reserve may scale back its efforts to stimulate the economy muted optimism over takeover activity.

The Dow Jones industrial average .DJI edged up 9.39 points, or 0.08 percent, to 11,201.97. The Standard & Poor's 500 Index .SPX was off 1.46 points, or 0.12 percent, to 1,197.75. The Nasdaq Composite Index .IXIC slipped 4.39 points, or 0.17 percent, to 2,513.82.

(Reporting by Blaise Robinson; editing by David Hulmes)

Another sharp sell-off in Chinese stocks in late trade also unnerved some investors and led them to wonder if prices of riskier assets were turning lower for good.

The tepid mood in equity market spilled into Europe. Britain's FTSE 100 .FTSE fell 0.7 percent and France's CAC 40 .FCHI lost 0.8 percent.

The Shanghai Composite Index .SSEC slid 4.3 percent at one point as investors, worried China may further tighten monetary policy, sold blue-chip bank and energy shares. .SS

"The swings in China are radical in the last few days," said Jackson Wong, an investment manager at Tanrich Securities in Hong Kong. "People are still trying to figure out if this is the beginning of a downtrend."

The overall cautious tone kept the MSCI Asian stock index outside Japan down 0.1 percent, an insignificant move compared to its 16 percent jump since early September.

Japan's Nikkei .N225 initially bucked the downdraft and rose to five-month highs, but it too eventually succumbed to end down 0.3 percent. .T

Uncertainty over whether Ireland, faced with record borrowing costs, needs to be bailed out by its euro zone partners to pay its debts also did little for the market mood.

As it is, Ireland's woes have raised borrowing costs for other fiscally strapped euro zone nations such as Spain and Portugal. Euro zone officials are set to meet later to try to find a way to end Ireland's debt crisis.

The euro fell as far as $1.3560 at one point, but clawed back by late trade after dovish remarks from a Federal Reserve official nudged the dollar lower.

But the dollar stayed firm on the day and depressed prices of most commodities. Oil lost 0.8 percent to pull further away from last week's 25-month highs <O/R>.

Yet, some analysts thought the latest pull-back in prices had less to do with a reassesment of market risks, and more to do with investors wanting to take profits and cut stretched bets.

"The European markets could potentially cause contagion pressures to erupt if people start liquidating. But realistically the dynamic within Asia remains very strong," said Peter Redward, the head of emerging Asia research at Barclays in Singapore.

Underscoring Asia's sturdy economic growth, the South Korean central bank raised interest rates on Tuesday and hinted there could be more hikes to come.

That Asia is tightening policy is a world away from the United States, where a Fed official said on Tuesday an exit from the present super-loose policy may be "years away."

Dublin is under pressure from the European Central Bank and euro zone peers to take a quick decision on applying for aid amid signs that market contagion is spreading to fellow struggler Portugal and could suck in bigger states.

The Irish government, trying to protect a slim parliamentary majority, says it is talking to European partners about how to provide stability for its banks but denies that a state rescue is needed to stop its problems spilling into other countries.

"I would hope after the Ecofin meeting this afternoon and tomorrow there would be more logic introduced into this," Ireland's European affairs minister, Dick Roche, told BBC Radio.

"There is no reason why we should trigger an IMF or an EU-type bailout."

Luxembourg Prime Minister Jean Claude-Juncker, who chairs Tuesday's talks in Brussels, said Ireland was not even close to asking for a Greek-style bailout, which would involve tough austerity terms enforced by the European Commission and the IMF.

But the Irish opposition said moves were already under way.

Bank of Spain Governor Miguel Angel Fernandez Ordonez urged Dublin on Monday to do more to calm financial markets, telling reporters: "It's not up to me to make a decision on Ireland, it's Ireland that should take the decision at the right moment."

Ireland's public borrowing needs are funded until mid-2011, but its bond yields have soared in the past week and its state-guaranteed banks are largely shut out of inter-bank lending and reliant on the ECB for funds.

This has helped push up the borrowing costs of other countries on the 16-country euro zone's periphery, such as Spain and Portugal.

The Irish coalition government has been reluctant to apply for assistance, partly because it faces a by-election it can ill afford to lose on November 25 and also because it says it wants to preserve its sovereignty.

Dublin has hinted it may ask for funding to support its banks, which were driven into debt by the global financial crisis and a property market crash, rather than requesting a politically embarrassing state bailout.

"The cost of money as expressed in the bond market has been very high although it eased today. We have to discuss these matters with partners ... how best to underpin financial and banking stability within the euro area," Prime Minister Brian Cowen told the national broadcaster RTE on Monday.

If such high borrowing costs became the norm, it would be hard for banks "to function as engines of recovery," he said.

SPILLOVER