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The labor market has been among the weakest parts of the U.S. economy, and economists see gains in that area as evidence that the recovery is picking up steam. Manufacturing, on the other hand, has led the recovery.

U.S. private employers added a stronger-than-forecast 93,000 jobs in November, the biggest rise since November 2007, after an upwardly revised gain of 82,000 the month before, data by ADP Employer Services, which developed the report with Macroeconomic Advisers LLC, showed Wednesday.

In a separate report, the Institute for Supply Management said its index of national factory activity dipped to 56.6 last month from 56.9 in October, in line with expectations and well above the 50 level which indicates expansion.

The report also showed employment plans were steady with the prior month.

The private payrolls rise "is just another sign of re-acceleration in the labor market. Some of the details suggest that there is a 60 percent chance that the government's payroll number could beat consensus," said John Canally, Investment Strategist at LPL Financial in Boston.

The U.S. government's monthly employment report on Friday is forecast to show another month of job gains in both the private and public sectors. In a Reuters poll, nonfarm payrolls are seen up 140,000 in November while private payrolls are seen up 153,000.

U.S. stocks ended up more than 2 percent, helped partly by the data but also by speculation that the European Central Bank would take tough measures to address the euro zone debt crisis. The U.S. dollar ended down against the euro, which snapped a three-day decline. Yields on benchmark U.S. Treasury 10-year notes were sharply higher.

UNEMPLOYMENT STILL SEEN HIGH

Even though economists cheered the job gains, they noted the labor market still has a long way to go. Friday's jobs report is forecast to show the U.S. unemployment rate remained at 9.6 percent in November.

Also, the number of planned layoffs in November by U.S. employers rose to the highest since March, according to a report by consultants Challenger, Gray & Christmas, Inc.

Employers announced 48,711 planned job cuts last month, up 28 percent from 37,986 in October, with the government and nonprofit sector leading the rise, the report showed.

A government report showing construction spending posted a 0.7 percent gain in October provided a more upbeat view of the economy. Expectations had been for a 0.4 percent decline in spending, a Reuters poll showed.

Another report showed that nonfarm productivity grew faster than previously estimated in the third quarter. According to the government data, productivity increased at an annual rate of 2.3 percent rather than the 1.9 percent pace reported last month, as employers squeezed more output from workers and kept costs down.

Suggesting improvement in consumer demand also, U.S. auto sales rose 17 percent in November from a year earlier, according to manufacturers on Wednesday.

The two companies remain in direct negotiations, sources said on Wednesday.

"The more Google acquires, the more antitrust issues they are opening themselves up to," said a source familiar with the situation, who requested anonymity because the talks are ongoing. "That has to be considered."

The review process in the United States will take a long time, said one head of media investment banking who is not involved in the discussions.

But one argument that Google could make is that the barriers to entry for a discount coupon company are low, given the 80 to 100 participants already in the market, said a sector banker who is not involved in the talks.

A possible deal will undoubtedly bring more vendors and customers to one place, but that banker said Google will be able to assert that although it is buying a big participant, the deal is not anticompetitive.

Groupon said it would not address any speculation about its business, an apparent reference to media reports on Tuesday that Google was close to buying it for $6 billion.

Google shares gained 1.6 percent to close at $564.35 on Wednesday.

Chicago-based Groupon separately said it was acquiring Ludic Labs, which develops local marketing services including Offer Foundry and Diddit. It also announced the opening of an office in downtown Palo Alto, California, and plans to expand its team there from 25 people to more than 100 in the next year.

Late on Tuesday, Groupon said it had acquired three "daily deal" websites -- uBuyiBuy, Beeconomic and Atlaspost -- to expand its reach across East and Southeast Asia. Atlaspost has more than 1.2 million users in Taiwan, Groupon said.

Groupon did not disclose terms of any of the transactions.

The company sends its members daily e-mails with details of discounts for 200 goods and services. The deals are activated only when a minimum number of people agree to make a purchase, giving Groupon the clout to negotiate steep group discounts on products and services.

The three Asian companies, active in Taiwan, Hong Kong and Singapore, will transition to the Groupon brand in a few months.

Groupon also launched Groupon Hong Kong, Groupon Singapore, Groupon Philippines and Groupon Taiwan on Wednesday.

"We see enormous potential in the Asian marketplace," President Rob Solomon said in a statement.

Groupon's global network has more than 33 million subscribers in 35 countries.

(Reporting by Martinne Geller in New York and Melanie Lee in Shanghai; Editing by Chris Lewis, Lisa Von Ahn and Matthew Lewis)

The plan faced an uphill struggle to win sufficient backing to trigger a congressional vote. Even if that happens, analysts predict Congress won't take substantive steps to reduce the deficit this year.

Changes made to the plan included dropping a proposal to kill the popular mortgage interest tax deduction, as had been recommended on November 10. The revised version proposed a limited, 12 percent mortgage interest tax credit.

In an attempt to attract backing from elected lawmakers on the 18-member commission, the revised plan also backed off a proposal to tax capital gains and dividends as ordinary income and suggested a 20 percent investment income exclusion.

Two key senators -- Democrat Kent Conrad and Republican Judd Gregg -- said they would support the plan at a meeting on Wednesday. A final commission vote is set for Friday.

The panel's co-chairmen need 14 "yes" votes to trigger a congressional vote on the proposal. President Barack Obama set up the commission in February.

The panel's revised plan envisages reducing the budget deficit to 2.3 percent of gross domestic product by 2015, from 8.9 percent in the last fiscal year -- a figure bloated by efforts to lift the U.S. economy out of its deepest recession since the 1930s, Bush-era tax cuts and two costly wars.

To accomplish that goal, the plan urges deep cuts in military and domestic programs starting in 2012, a 15 cent per gallon hike in the gas tax and requiring Medicare participants to pay more costs themselves. It also recommends raising the age for receiving Social Security benefits.

SEVEN VOTES FOR PLAN

At Wednesday's meeting, seven commission members, including co-chairmen Erskine Bowles and Alan Simpson, expressed support for the plan; one member voiced opposition; and the remainder expressed concerns without committing one way or the other.

Bowles was chief of staff for former Democratic President Bill Clinton. Simpson is a former Republican senator.

Bowles vowed not to retreat from the hardest-hitting aspects of the plan, a result of months of debate. "Al and I are not going to wimp out. For us, it's go big or go home ... We're not interested in 14 votes for a whitewash," Bowles said.

Democratic Representative Jan Schakowsky, a commission member, said "I can't support it and will be voting no."

Republican Representative Paul Ryan said: "I don't believe this sufficiently fixes the healthcare problem."

AARP, which represents millions of older Americans, said the plan would cut Social Security too deeply and raise Medicare costs for beneficiaries.

The U.S. central bank's Beige Book showed more anecdotal evidence that the economy remains unable to break into a faster expansion needed to generate sufficient job growth. The report appeared unlikely to derail the Fed's latest efforts to push down borrowing costs by boosting its purchases of Treasury debt.

"Reports from the twelve Federal Reserve Districts indicate that the economy continued to improve, on balance, during the reporting period from early/mid-October to mid-November," the Fed said in the report, which was released ahead of its next policy meeting on December 15.

The Fed said economic activity in the Boston, Cleveland, Atlanta, Dallas and San Francisco districts increased at a "slight to modest" pace, while the New York, Richmond, Chicago, Minneapolis and Kansas City districts reported a "somewhat stronger" pace of activity.

Philadelphia and St. Louis reported business conditions as "mixed", the Fed said.

The Beige Book showed that manufacturing activity continued to expand in almost all districts, with "relatively strong growth seen in the metal fabrication and the automotive industries."

But it said housing markets remained depressed, with several districts reporting a further weakening in the sector over the past six weeks.

Reports on consumer spending were seen as positive, with several districts expecting holiday sales to exceed year-ago levels. But the Fed noted that households were sensitive to prices and were still focused on buying necessities.

"Hiring activity showed some improvement across most districts, although employers are waiting for clearer signals of expanding business prospects before adding significantly to payrolls," the Fed said. Atlanta and Chicago reported a preference for hiring temporary workers, while staffing firms in Dallas described hiring activity as "strong".

Wage pressures remained "subdued" across districts, indicating little inflation pressure.

The Fed said prices for final goods and services were fairly stable across districts despite rising input costs, especially for agricultural commodities, metals and fuel.

(Reporting by David Lawder, Editing by Chizu Nomiyama)

Sales in GM's four remaining U.S. brands following its restructuring rose 21 percent in November from a year earlier, said GM, which completed the largest-ever IPO in November to return to the U.S. stock market.

Analysts overall expect automakers to report sales at slightly above a 12 million annualized rate for light vehicles, driven by discounting aimed to counter a slow return in consumer demand.

GM said its core Chevrolet, Buick, GMC and Cadillac brands were on track to gain market share for the year. Sales of GM's Chevrolet Traverse, GMC Acadia and Buick Enclave sister crossovers rose a combined 38 percent from a year earlier.

The new Chevy Cruze helped punch car sales up 17 percent in November from a year earlier, GM said. GM shares were up 1.3 percent at $34.65 on the New York Stock Exchange on Wednesday morning.

Auto sales for November are one of the first snapshots of consumer behavior at the holiday shopping season. However, automakers typically run year-end discount programs from before the U.S. Thanksgiving holiday through year end.

Hyundai Motor Co (005380.KS) and Ford Motor Co (F.N), are expected to have the biggest sales gains in November, continuing a trend that has seen the two automakers take share from rivals in 2010.

The final weekend of November sales was lifted by Thanksgiving holiday deals sponsored by individual dealers and manufacturers, including Toyota Motor Corp (7203.T) and Nissan Motor Co (7201.T), analysts said.

Analysts expect Toyota to report a 2 percent sales drop in November despite increased spending on incentives, making it the only major automaker with a decline and illustrating the difficulties Toyota still faces in winning back U.S. consumers a year after starting recalls that rocked its reputation for quality and safety.

Toyota said on Monday it would fix about 378,000 Prius models in the United States because of a risk that a coolant pump could malfunction and cause the car to overheat and lose power.

Since last November, Toyota has recalled about 14 million vehicles worldwide, including 11 million in the United States.

Analysts have come to expect the annualized sales rate for November to come in right around October's 12.2 million rate. That would be encouraging for the traditionally slow sales month for the industry, analysts said.

After a disastrous 2009 that saw GM and Chrysler collapse into government-funded bankruptcies, the industry is expected to see 2010 sales of about 11.5 million vehicles. That would represent a gain of about 10 percent.

Most industry estimates for 2011 put sales between 12 million and 13 million vehicles. Before the financial crisis, automakers routinely sold more than 16 million vehicles per year in the U.S. market.

(Reporting by David Bailey, Kevin Krolicki and Deepa Seetharaman, editing by Matthew Lewis)

The brass at Starbucks Corp (SBUX.O) says the consumer packaged goods business should grow faster than its retail cafes, which total 17,000 globally.

But analysts want specifics on how it will accomplish that goal, particularly as it works through a messy break-up with Kraft Foods Inc (KFT.N), which has handled sales of Starbucks packaged coffee and tea in supermarkets and club stores since 1998.

The Seattle coffee giant is seeking to sell more Starbucks-branded products, including packaged coffee and tea, Via instant coffee, bottled drinks and ice cream through channels ranging from supermarkets and warehouse stores to restaurants and hotels.

For its fiscal year ended October 3, packaged goods accounted for just 7 percent of Starbucks' revenue of $10.7 billion. The company says it has healthy margins and lots of room to run.

Starbucks is also expected to provide more information about the locations of 400 new international and 100 new U.S. cafes planned for its new fiscal year.

Earlier this week, Starbucks accused Kraft of multiple contractual breaches, including mismanaging grocery sales. It wants to end the union on March 1, ahead of what it says was a 2014 expiration date.

In the 12 years Kraft has handled Starbucks grocery coffee and tea sales, revenue grew to $500 million from $50 million.

Kraft asserts that the deal is perpetual and denied breaching the contract. It said that if Starbucks wants out, it must pay Kraft the fair market value of the business plus a premium of as much as 35 percent.

If the companies do not settle their differences on their own, it will go before dispute resolution firm JAMS in Chicago.

BUYING ITS FREEDOM

The biggest unknown is how much Starbucks might have to pay for its freedom from Kraft.

Bernstein analyst Sara Senatore said the value of Kraft's business could be around $1.2 billion, excluding any premium, if arbitrators agree that the contract is perpetual. If they agree with Starbucks that the pact would have expired in 2014, the value could be less than $300 million, she said.

"We would expect an arbitration award to be below the perpetuity value," Senatore said, pointing to the complaints Starbucks has levied against Kraft.

Baird analyst David Tarantino said the divorce from Kraft could be a wash for Starbucks, which does not have expertise in placing products in grocery stores.

By 0954 GMT, futures for the S&P 500, Nasdaq futures and Dow Jones futures were up 0.7 to 0.8 percent, on track to rebound from falls in the previous session.

China posted better-than-expected factory production data in November, with the official Chinese purchasing managers' index (PMI) rising to a seven-month high of 55.2.

Adding to the upbeat view on the recovery, factory production in India also expanded in November at its fastest pace in six months, while euro zone manufacturing grew by its quickest rate in four months.

The upbeat data sets a positive tone ahead of the release of U.S. ISM manufacturing numbers, due at 1500 GMT. Other data likely to highlight the health of the economy include the ADP private payrolls figures at 1315 GMT.

Gains, however, could be capped by lingering concerns over the euro zone's debt troubles, with investors awaiting the next move by policymakers to contain the crisis.

Standard & Poor's warned it could cut Portugal's credit ratings within the next three months if the country's growth prospects weaken further or if private creditors become subordinated to public creditors in a possible financial aid program.

In company news, Airbus (EAD.PA) plans to upgrade its best-selling A320 medium-haul jets from 2016 with new engines. Airbus and U.S. rival Boeing (BA.N) had, until now, resisted changing winning designs that are the backbone of global airline business.

Oil-pipes company Wellstream (WSML.L) has entered into formal talks with General Electric (GE.N) and National Oilwell Varco (NOV.N) over a potential 755 million pound-plus deal, The Daily Telegraph reported.

Bank of New York Mellon's (BK.N) wealth management arm is in advanced takeover talks with a number of U.S. and global firms, most of which manage at least $1 billion in assets, the head of the unit said on Tuesday.

State Street Corp (STT.N) said on Tuesday it plans to cut about 1,400 jobs, or 5 percent of its workforce, by the end of 2011, the latest cost-saving step by the financial company.

U.S. Federal Reserve Chairman Ben Bernanke warned on Tuesday that a long period of high unemployment could exact a steep social cost, as he and other Fed officials defended the central bank against criticism of its easy money policy.

In European equity markets, the FTSEurofirst 300 .FTEU3 rose 0.9 percent in early trade, with banks and mining stocks among the biggest gainers. .EU

(Reporting by Harpreet Bhal; Editing by Jon Loades-Carter)

A day after investors pushed the risk premiums on Spanish and Italian government debt to new highs, the bond spreads of countries on Europe's southern periphery narrowed and the euro steadied on speculation that the European Central Bank could unveil new anti-crisis steps at a meeting on Thursday.

But calmer markets failed to remove deep worries about contagion in the 16-nation euro bloc that has pushed European policymakers onto the defensive and forced them to search for new ways to stabilize their 12-year-old currency project.

An 85 billion euro ($110.7 billion) EU/IMF rescue of Ireland last weekend and public reassurances from European politicians and central bankers have been largely ignored by investors, who have targeted Portugal, Spain and Italy, intent on testing the EU's resolve and crisis-fighting resources.

"You may think and you sometimes read that Europe is in chaos, disintegrating, the euro about to disappear. This is wrong," Klaus Regling, the head of the EU's temporary rescue mechanism, said in a speech in Singapore.

Reflecting global concerns about the euro zone crisis, the U.S. Treasury announced late on Tuesday that it would dispatch Undersecretary for International Affairs Lael Brainard to Europe this week to discuss the turmoil.

Brainard will visit Madrid, Berlin and Paris to discuss "economic developments in Europe" and the "shared agenda on strong and sustainable growth," the Treasury said in a brief statement.

G20 sources told Reuters that deputy finance ministers from the group of major rich and developing nations had discussed the financial situation in Europe on Monday in a previously arranged conference call, although they described the call as routine.

GLOBAL RISK

Citigroup Chief Economist Willem Buiter warned in a research note this week that the euro zone turmoil may be the "opening act" of a global sovereign debt crisis that could soon infect the United States and Japan.

EU plans to make private bond holders shoulder some of the pain from any sovereign debt restructuring after mid-2013 have led investors to reassess the risk of putting their money in the government bonds of high-deficit countries.

European Central Bank President Jean-Claude Trichet warned markets on Tuesday against underestimating the determination of policymakers to stabilize the euro zone, but their options for stopping the rot appear limited.

The ECB could decide to increase the scale of its bond purchase program at its Thursday meeting, but resistance to such a step is high on the bank's Governing Council, with some members instead advocating an end to extraordinary crisis measures.

Meanwhile, Germany has resisted pressure from countries such as France to turn the euro zone into a "fiscal union" in which member states sacrifice sovereignty over economic policy for the good of the group.

Chancellor Angela Merkel is also skeptical about putting up more funds for bailouts, concerned that German taxpayers would end up shouldering the lion's share of a string of rescues of countries which Berlin believes have made themselves vulnerable through economic mismanagement.

But manufacturing surveys in both Asian giants also highlighted a worry that has clouded the outlook for investors: rising inflationary pressure and the need for more monetary tightening in fast-growing developing economies.

That could be a bitter pill to swallow with Europe teetering on the brink of more serious debt troubles. The euro stabilized on Wednesday after falling a day earlier on concern that member states may ultimately be forced to default.

Deputy finance ministers from the Group of 20 economies discussed "the financial situation in Europe" on Monday Asia time in a teleconference arranged last week, a senior G20 source in Asia said.

The manufacturing sector in Asia provided some solace from the gloomy prognosis in Europe.

Two purchasing managers' indexes in China registered their strongest readings in more than half a year and helped lift Asian shares outside Japan .MIAPJ0000PUS by 0.6 percent.

The story was similar in India, where the HSBC Markit PMI climbed to a six-month high.

While a rise in output and new orders drove the PMI gains in China, the biggest increases came in input prices.

"Good news from the economy may not be that good for the market as it is concerned about more tightening," said Ting Lu, an economist with Bank of America-Merrill Lynch.

"The high PMI reading could convince Beijing to tighten a bit more on the margin."

ASIAN RESILIENCE?

The strong Indian PMI followed data on Tuesday that showed its economy grew by a blistering 8.9 percent in the September quarter from a year earlier.

That is likely to add pressure on the central bank to continue raising interest rates, though traders do not expect another hike until early next year.

South Korea was another bright spot in Asia. Exports from the region's fourth-largest economy rose slightly more than expected in November from a year earlier, while a key index measuring its manufacturing-sector activity reversed a six-month falling streak.

But in Asia's leading developed economy, the picture was far less rosy.