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The Dow posted its best day since March 2009 after the Federal Reserve, the European Central Bank and other major central banks stepped in to head off escalating funding pressures that threaten the key arteries of the world's financial system.

The S&P 500 scored its best daily percentage gain since August.

The central banks' liquidity move touched off a buying frenzy in financial shares. The S&P financial sector index gained 6.6 percent, with Bank of America the most actively traded stock. The stock jumped 7.3 percent to $5.44 on more than 420 million shares traded.

The drama in Europe kept the U.S. stock market on a roller-coaster ride throughout the month. For November, the S&P ended down just 0.5 percent, but the month was marked by sharp daily swings.

"You don't have to fix everything, you have to be on a path towards fixing things," said Tobias Levkovich, chief U.S. equity strategist at Citigroup in New York.

"Markets will reward you for the efforts you are making as long as you are moving in the right direction. It's the carrot and the stick; you get rewarded when you do the right thing, and you get punished when you do the wrong thing."

The Dow Jones industrial average shot up 490.05 points, or 4.24 percent, to end at 12,045.68. The Standard & Poor's 500 Index jumped 51.77 points, or 4.33 percent, to 1,246.96. The Nasdaq Composite Index soared 104.83 points, or 4.17 percent, to close at 2,620.34.

The Dow scored its largest daily gain -- in terms of points and percentage -- since March 23, 2009.

The S&P 500 posted its best daily percentage advance since August 11.

For the month, the Dow gained 0.8 percent, while the Nasdaq slid 2.4 percent.

Other economically sensitive sectors, including energy, materials and industrials, also were strong performers for the day.

Copper and oil futures rose sharply, while the S&P materials sector index jumped 5.9 percent.

The central banks' actions were intended to ensure that European banks, facing a credit crunch, have enough funding amid the euro zone's worsening sovereign debt crisis.

The moves followed an unexpected cut in bank reserve requirements in China, intended to boost an economy running at its weakest pace since 2009.

Among the banks, shares of JPMorgan Chase & Co gained 8.4 percent to $30.97, its biggest daily percentage gain since May 2009.

The gains in financial shares came despite Standard & Poor's move to cut the credit ratings of 15 big banks, mostly in Europe and the United States, late on Tuesday.

Further encouraging investors, the latest U.S. data suggested the U.S. economy was moving more solidly toward recovery. The U.S. private sector added the most jobs in nearly a year in November, while business activity in the U.S. Midwest grew faster than expected in November.

The day's volume was high, with nearly 10 billion shares changing hands during the day on U.S. exchanges compared with the daily average of 7.96 billion shares.

Advancers beat decliners on the NYSE by nearly 7 to 1 and on the Nasdaq, by about 5 to 1.

(Reporting by Caroline Valetkevitch; Additional reporting by Chuck Mikolajczak and Rodrigo Campos; Editing by Jan Paschal)

The potential bid by the consortium, which would include China's Alibaba Group and Japan's Softbank Corp, has not yet been finalized, the source and two other people familiar with the matter said.

The Chinese e-commerce giant, whose primary interest is in buying back the 40 percent stake in Alibaba owned by Yahoo, is still keeping its options open, and said it has not decided yet whether to participate in a bid for all of Yahoo.

"Alibaba Group has not made a decision to be part of a whole company bid for Yahoo," Alibaba Group spokesman John Spelich said in an emailed statement on Wednesday.

Blackstone and Bain declined to comment, while Yahoo and Softbank representatives were not immediately available to comment.

Although a bid for all of Yahoo is not yet on the table, the latest twist turns on the heat on Yahoo's board, which has received at least two offers for a minority stake in the company according to people familiar with the matter -- one from a consortium of Silver Lake and Microsoft Corp and another by TPG Capital. Silver Lake and Microsoft have declined to comment.

Yahoo's shares closed up 1 cent at $15.71 on Wednesday on the New York Stock Exchange.

(Additional reporting by Greg Roumeliotis and Soyoung Kim in New York; Editing by Steve Orlofsky and Carol Bishopric)

Standard & Poor's reduced its credit ratings on 15 big banking companies, mostly in the Europe and the United States, on Tuesday as the result of a sweeping overhaul of its ratings criteria.

JPMorgan Chase & Co (JPM.N), Bank of America Corp (BAC.N), Citigroup Inc (C.N), Wells Fargo & Co (WFC.N), Goldman Sachs Group Inc (GS.N), Morgan Stanley (MS.N), Barclays Plc (BARC.L), HSBC Holdings Plc, (HSBA.L) Royal Bank of Scotland AAHAUS.UL Group Plc and UBS AG (UBSN.VX), were among the banks that had their ratings reduced by one notch each.

The ADP Employment report for November, due at 1315 GMT, is expected to show its best reading since April and the third consecutive gain greater than 110,000. The Pending Home Sales Index, to be released at 1500 GMT, is seen rising for October.

Samsung Electronics (005930.KS) is set to resume selling its Galaxy tablet computer in Australia as early as Friday, after the South Korean technology firm won a rare legal victory in a long-running global patent war with Apple Inc (AAPL.O).

Boeing (BA.N) could be at a disadvantage to Airbus because the bankruptcy of AMR Corp (AMR.N), the parent of American Airlines, places up to $40 billion of jet orders at the mercy of a U.S. bankruptcy court, lawyers and bankruptcy experts said.

Newmont Mining Corp (NEM.N) said it has suspended construction work at its Conga project in Peru in agreement with the government, for the safety of employees and the community.

U.S. communications regulators released a staff report criticizing AT&T Inc's (T.N) $39 billion plan to purchase T-Mobile USA, even though they agreed on Tuesday to let the companies withdraw their request for approval.

Goldman Sachs (GS.N) has raised $600 million from clients such as pension funds, wealthy families and large institutions for a new fund that would provide start-up money to hedge-fund managers, the Wall Street Journal said.

European stocks .FTEU3 fell 0.8 percent on Wednesday, snapping a sharp three-session rally, after the Standard & Poor's downgrade of a number of European and U.S. banks.

On Tuesday, the Dow and S&P 500 advanced for a second day on Tuesday as stronger-than-expected consumer confidence data and hopes for further progress on a solution to Europe's fiscal mess bolstered sentiment.

Euro zone ministers agreed to ramp up the firepower of their rescue fund, but couldn't say by how much, and may turn to the IMF for more help as a jump in Italy's borrowing costs pushed the region closer to financial disaster.

The Dow Jones industrial average .DJI closed up 32.62 points, or 0.28 percent, at 11,555.63. The Standard & Poor's 500 Index .SPX ended up 2.64 points, or 0.22 percent, at 1,195.19. The Nasdaq composite index .IXIC closed down 11.83 points, or 0.47 percent, at 2,515.51.

(Reporting by Atul Prakash. Editing by Jane Merriman)

"We are now entering the critical period of 10 days to complete and conclude the crisis response of the European Union," Economic and Monetary Affairs Commissioner Olli Rehn said on Wednesday as EU finance ministers met.

Euro zone ministers agreed on Tuesday night on detailed plans to leverage the European Financial Stability Mechanism (EFSF), but could not say by how much because of rapidly worsening market conditions, prompting them to look to the IMF.

Italian and Spanish bond yields resumed their inexorable climb towards unsustainable levels on Wednesday, as markets assessed the rescue fund boost as inadequate.

Stocks fell and the euro weakened after ratings agency Standard & Poor's hit some of the world's leading banks with a credit downgrade.

"It must also be remembered that the EFSF is already funding at very wide (borrowing) levels over Germany, struggled in its last auction to raise the required funds and would have its rating put under severe pressure by any rating downgrade of France," Rabobank strategists said in a note.

"This must call into question any plans related to the EFSF. It is yesterday's solution and the market has simply moved on."

Two years into Europe's sovereign debt crisis, investors are fleeing the euro zone bond market, European banks are dumping government debt, south European banks are bleeding deposits and a recession looms, fuelling doubts about the survival of the single currency.

"We are now looking at a true financial crisis -- that is a broad-based disruption in financial markets," Christian Noyer, France's central bank governor and a governing council member of the European Central Bank, told a conference in Singapore.

The 17-nation Eurogroup adopted detailed plans to insure the first 20-30 percent of new bond issues for countries having funding difficulties and to create co-investment funds to attract foreign investors to buy euro zone government bonds.

Both schemes would be operational by January with about 250 billion euros from the euro zone's EFSF bailout fund available to leverage after funding a second rescue program for Greece, Eurogroup chairman Jean-Claude Juncker said.

The aim was for the IMF to match and support the new firepower of the EFSF, Juncker told a news conference.

But with China and other major sovereign funds cautious about investing more in euro zone debt, EFSF chief Klaus Regling said he did not expect investors to commit major amounts to the leveraging options in the next days or weeks, and he could not put a figure on the final size of the leveraged fund.

"It is really not possible to give one number for leveraging because it is a process. We will not give out a hundred billion next month, we will need money as we go along," Regling said.

RADICAL MEASURES?

Most analysts agree that only more radical measures such as massive intervention by the ECB to buy government bonds directly or indirectly can staunch the crisis.

The prospects of drawing the IMF more deeply into supporting the euro zone are uncertain. Several big economies are skeptical of European calls for more resources for the global lender.

The United States, Japan and other Asian states are hesitant to chip in unless Europe commits to first use its own resources to fix the problem and peripheral euro zone states map out more concrete steps on fiscal and economic reforms.

"Nobody wants to spend money on something they doubt would work," a G20 official said.

"That goes not only for Europe but for any other country outside Europe. The threshold for seeking IMF help is quite high. Those seeking help need to be willing to give up some of their jurisdiction on fiscal policy and willing to undergo painful reform. Mere pledges and speeches won't do."

New Italian Prime Minister Mario Monti outlined his plans to the euro zone ministers and was told he would have to take extra deficit cutting measures beyond an austerity plan already adopted to meet its balance budget promise in 2013.

Italian bond yields are now above the levels at which Greece, Ireland and Portugal were forced to apply for EU/IMF bailouts, and Rome has a wall of issuance due from late January to roll over maturing debt.

GREECE GETS CASH

The Eurogroup ministers agreed to release their portion of an 8 billion euro aid payment to Greece, the sixth installment of 110 billion euros of EU/IMF loans agreed last year and necessary to help Athens stave off the immediate threat of default.

Juncker said the money would be released by mid-December, once the IMF signs off on its portion early next month.

G20 leaders promised this month to boost the agency's warchest. However, another G20 source said policymakers had made no progress since then in efforts to boost IMF resources, which at current levels may not be sufficient to overcome the crisis.

EU sources said one option being explored is for euro system central banks to lend to the IMF so it can in turn lend to Italy and Spain while applying IMF borrowing conditions.

"We will discuss with the ECB. The ECB is an independent institution, so we will put on the table some proposals and after that it is for the ECB to take the decision," Belgian Finance Minister Didier Reynders told reporters.

With Germany opposed to the idea of the ECB providing liquidity to the EFSF or acting as a lender of last resort, the euro zone needs a way of calming markets and fast.

The ECB shows no sign yet of responding to widespread calls to massively increase its bond-buying although EU officials said it may have to shift, even if the EFSF was bolstered by IMF help.

"Despite the attempt to leverage the EFSF, I would agree that the IMF and European Central Bank have to be in the boat," one euro zone source told Reuters.

A Reuters poll of economists showed a 40 percent chance of the ECB stepping up purchases with freshly printed money within six months, something it has opposed so far.

The poll forecast a 60 percent chance of an ECB rate cut to 1.0 percent next week and a big majority of economists said they expect the central bank to announce new long-term liquidity tenders to help keep banks afloat at its next meeting on Dec 8.

EU powerhouse Germany has pinned its efforts on a drive for closer fiscal integration among euro zone members with coercive powers to veto euro zone members' budgets that breach EU rules.

Chancellor Angela Merkel told lawmakers she would not make a deal at a December 9 European Union summit to drop resistance to joint euro zone bonds in exchange for progress on strengthening fiscal rules, MPs quoted her as saying.

She told a closed-door meeting Europe was "a long way from euro bonds," suggesting they may not be ruled out forever.

(Additional reporting by Marius Zaharia in London, Erik Kirschbaum in Berlin, Robin Emmott and John O'Donnell in Brussels, Saeed Azhar and Kevin Lim in Singapore; Writing by Paul Taylor/Mike Peacock; Editing by Neil Fullick)

European share markets were set to dip, with financial spreadbetters expecting Britain's FTSE 100 .FTSE and France's CAC-40 .FCHI to open down 0.9 percent and Germany's DAX .GDAXI to open down 0.6 percent. .EU

An early rise in Asian shares was mostly seen as a correction to last week's huge selling, with investors only tepidly scaling back risk aversion as they waited for more euro zone debt sales and meetings ahead.

MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS rose as much as 0.5 percent but then reversed course and was down 0.6 percent. It rose on Monday and Tuesday after slumping to a seven-week low on Friday. The index was set for a monthly loss of around 9 percent.

Japan's Nikkei .N225 ended down 0.5 percent, weighed by the downgrade by Standard & Poor's of several major U.S. and European banks. Financial firms dragged Hong Kong and China shares lower -- the Shanghai Composite was down 3.7 percent -- after a Chinese central bank adviser dashed hopes of a monetary policy easing. .T

Focus is turning to a crucial European Union summit on December 9, with Germany and France working to propose a more rapid European fiscal integration while Germany's opposition to an expanded role of the European Central Bank in lending to the region's financially-strapped economies has hurt market sentiment.

"The focus remains on who will give money, to which no fresh news was provided," said Junya Tanase, chief currency strategist at JPMorgan Chase in Tokyo, adding that investors were likely relaxing their risk aversion stance but not turning risk-on yet.

"In the end, whether the ECB will become more actively involved in the debt crisis is key as it is the only viable lender. All other developments are mere technicals."

The euro inched up 0.1 percent to $1.3333, but still well below Tuesday's high of $1.3443. <FRX/>

U.S. stocks rose on Tuesday on euro zone hopes as well as a bounce in U.S. consumer confidence in November in another sign the U.S. economy remains on a recovery path.

"There is still a lot of concern about what's happening in the euro zone, but investors appear to be just a little bit more hopeful that progress has been made," said Juliette Saly, market analyst at Commonwealth Securities in Sydney.

"Also heading into the end of the year, investors see our market has been more sold off than the U.S," she said, adding also that follow-through movement hasn't been all that strong and volume was quite low.

On Wednesday, the benchmark Australian share index .AXJO rose 0.4 percent to a one-week high, as banks gained and data showed record business investment in the third quarter.

This month, the Dow Jones industrial average .DJI has lost 3.3 percent while the Standard & Poor's 500 Index .SPX has fallen 4.6 percent.

Euro zone officials agreed on Tuesday to leverage the firepower of their bailout fund, the European Financial Stability Facility (EFSF), using it as an insurance scheme and a co-investment program. They also agreed to extend aid payments to Greece and Ireland.

Hopes rose for more involvement from the IMF after Eurogroup president Jean-Claude Juncker said they have agreed to rapidly explore ways of boosting the IMF's resources through bilateral loans so it can match the leveraged EFSF's capabilities.

FUNDING STRESS

Italy, which faces a dire funding situation with its skyrocketing borrowing costs, has had preliminary discussions with the IMF about financial support, but no decision has been taken, several sources close to the situation said.

On Tuesday, Italy had to pay a record 7.89 percent yield for its 3-year bonds, above levels which Greece, Ireland and Portugal were forced to apply for international bailouts, but drew strong demand, with the maximum 7.5 billion euros sold.

The inversion of three-year yields being above the 7.3 percent 10-yield was also noted in the Italian credit default swap curve, where the shorter-dated contracts were quoted higher than the 5-year CDS.

Spain and France are due to tap the market on Thursday.

Euro zone funding strains persisted on Tuesday, with the spread between three-month euro Libor rates and overnight indexed swap rates reaching 87 basis points, near 90 hit in November, its highest since March 2009.

Banks were reluctant to lend to each other, pushing one-year euro/dollar cross currency basis swaps, or the premium that a borrower of dollars needs to pay to access funds, to 108 basis points, its most expensive level since 115 basis points in late 2008.

Asian credit markets weakened, with spreads on the iTraxx Asia ex-Japan investment grade index widening by four basis points on Wednesday.

"Markets want to see more definitive action and until then we wont see aggressive buying just on positive headlines," said a Singapore-based trader with a European bank.

(Additional reporting by Umesh Desai in Hong Kong; Editing by Richard Borsuk)

Nishimura, known as one of more pessimistic board members, also said Tokyo must take resolute action if currency moves are out of line with economic fundamentals in an attempt to keep markets on guard against another yen-selling intervention in the event of a renewed yen spike.

"Europe's sovereign debt problems are essentially the result of expanding imbalances in the region ... thus we need to be aware that there is no immediate silver bullet for solving its problems," Nishimura said in a speech to business leaders in Kyoto, western Japan.

"We need to brace ourselves for global financial market tension remaining high for a long time. We must be mindful of the risk of some shock triggering a widespread credit crunch," said Nishimura, who is one of the BOJ's two deputy governors.

Nishimura became the latest of the BOJ's nine-member policy board to warn that the euro zone debt crisis posed the biggest risk to Japan's economy with repercussions already felt widely across the globe.

IMF ROLE

Japan's economy has rebounded from a recession triggered by the March 11 earthquake and tsunami but is expected to slow sharply this quarter as the initial spurt driven by companies restoring supply chains and production facilities tails off.

Data released earlier on Wednesday showed factory output rose more than expected as automakers continued to restock inventory overseas after restoring supply chains hit by the March earthquake.

Nishimura stuck to the BOJ's view that the world's third largest economy is set to resume a moderate recovery supported by the strength of emerging economies and reconstruction work.

But he added that the forecast faced various uncertainties with Europe's debt crisis seen weighing on global growth and on Japanese exports as the yen continues to draw safe-haven demand.

"We need to be mindful of the fact that the yen will likely draw demand as a relatively safe currency as risk aversion increases among global investors amid continued tensions in global markets," Nishimura said.

"If the yen rises sharply in a way that deviates from economic fundamentals, companies may accelerate the pace at which they shift production overseas in an irrecoverable way."

Concern about the impact of the yen's strength and Europe's debt crisis on Japan's economic recovery prompted its rating agency R&I announce a review for a possible downgrade of its AAA rating for the nation's debt.

"R&I positively views the fiscal consolidation stance of the (Prime Minister Yoshihiko) Noda administration, which took office at the end of August," it said in a statement.

"Nevertheless, with a delay in implementing measures for earthquake reconstruction and the persistently strong yen, the economic recovery lacks strength. Furthermore, the deepening European sovereign debt crisis and other factors are increasing uncertainty about external demand."

The BOJ, which meets for a rate review on December 20-21, could offer additional stimulus to help sustain the economy's recovery depending on how share prices and the yen perform, analysts say.

Europe's sovereign debt crisis has shown little sign of letup with investors fleeing the euro-zone bond market, causing yields in Italy to spike.

In Brussels, European finance ministers agreed to strengthen the euro zone's bailout fund and said they could ask the International Monetary Fund about more aid as bond yields surge across the region.

Nishimura said it would be natural to expect the International Monetary Fund to play a role in helping resolve Europe's debt woes, adding that in general Japan should do what it can to expand the global lender's functions.

Japan intervened in the currency market and eased monetary policy in October to ease the pain on the export-reliant economy from sharp yen rises and slowing overseas growth.

The BOJ kept monetary settings unchanged this month but has signaled its readiness to ease policy again if Japan's economic recovery comes under threat.

Nishimura surprised markets by proposing unsuccessfully in April that the BOJ should boost its asset purchases. He did not repeat the proposal in subsequent meetings and has voted with the majority.

(Editing by Michael Watson and Tomasz Janowski)

AMR had been the only major U.S. carrier to avoid bankruptcy in the past decade. Its rivals used bankruptcy to restructure their labor agreements and cut costs.

That left AMR, the third-largest U.S. airline behind United Continental Holdings Inc and Delta Air Lines Inc, with the highest labor costs in the industry and the only major airline still funding worker pensions.

"It completes the cycle," said Helane Becker, an analyst with Dahlman Rose & Co. "Every major airline in the united States has filed for Chapter 11."

AMR's move comes as U.S. airlines brace for an economic downturn that could see travel demand sag this year. Some top airlines, including AMR, have announced service reductions to offset weak demand.

In its bankruptcy filing, AMR said its cost-cutting in recent years had been insufficient and that it could not continue without changing its "uncompetitive cost structure."

"Without addressing the realities of the marketplace, AMR cannot be competitive with its peers," it said.

Shares of AMR, whose passenger planes average 3,000 daily U.S. departures, have tumbled 45 percent since the end of September.

Last week the shares hit their lowest level since 2003, when AMR skirted bankruptcy by winning wage concessions from its unions.

The airline said last month it was also suffering from soaring fuel prices that sent its costs up 40 percent in the third quarter compared with a year earlier.

AMR on Tuesday named Thomas Horton as chairman and chief executive, replacing Gerard Arpey, who retired.

Under its Chapter 11 bankruptcy filing in a New York court, the company listed assets of $24.72 billion and liabilities of $29.55 billion. The company said it has $4.1 billion in cash.

AMR said both American Airlines and its regional carrier American Eagle were expected to fly normal schedules throughout the Chapter 11 process.

"We plan to initiate further negotiations with all of our unions to reduce our labor costs to competitive levels," Horton said.

The union representing AMR's pilots called the bankruptcy filing a "solemn occasion."

"While today's news was not entirely unexpected, it is nevertheless disappointing that we find ourselves working for an airline that has lost its way," David Bates, president of the Allied Pilots Association, said in a statement.

"The 18-month timeline allotted for restructuring will almost certainly involve significant changes to the airline's business plan and to our contract," he said.

Dahlman's Becker said the bankruptcy proceedings would not solve AMR's problems and that the airline needed to rework its operations and boost revenue.

"Bankruptcy is not necessarily the be-all, end-all," she said. "They've got more problems to address in addition to the cost problem."

AMR's top rivals, UAL Corp and Delta Air Lines, used bankruptcy protection to slash costs and have since found merger partners: Delta bought Northwest Airlines and UAL bought Continental Airlines to form United Continental Holdings.

US Airways and United Airlines sough relief under Chapter 11 bankruptcy in 2002. Delta and Northwest filed in September 2005.

AMR has been in labor talks with its pilots for five years, and a wave of pilot retirements in October prompted speculation the airline was nearing a bankruptcy filing.

Some industry watchers believed the pilots chose to retire to lock in pension values that may now be in jeopardy as the company moves through bankruptcy court.

AMR said the bankruptcy has no direct legal impact on operations outside the United States. It also said it was not considering debtor-in-possession financing.

In addition to its passenger service, AMR carriers provide over 90 million pounds of weekly cargo lift around the globe.

AMR said Weil, Gotshal & Manges LLP is lead counsel on the bankruptcy case.

The case is in Re: AMR Corp, Southern District Of New York; No:11-15463.

(Reporting by Tanya Agrawal in Bangalore, Caroline Humer in New York, Tom Hals in Wilmington and Kyle Peterson in Chicago; Writing by Matt Daily; Editing by Gopakumar Warrier, Maureen Bavdek and John Wallace)

The yield on a new three-year Italian government bond soared to almost 8 percent, a level seen driving its financing costs to unaffordable levels if sustained for a long time.

The new three-year paper was trading at yields around 8 percent in the gray market before the auction, over 40 basis points more than the July 2014 bond, according to prices on Reuters.

Analysts said the huge rise in the yield on the three-year maturity -- last sold at the end of October at 4.93 percent -- supported demand and helped the Treasury place the target range of 2.5 billion to 3.5 billion euros planned for the first tranche.

In total, it sold 7.5 billion euros of bonds, close to the upper end of its target range.

"These are good auctions in terms of the amount of bids, size issued ... but the ever higher yields remain the concern," said Peter Chatwell, interest rate strategist at Credit Agricole.

"In an ideal world these yields, and the fact that the three-year was above 8 percent in the gray market this morning, would serve to give the EcoFin/Eurogroup a sense of added urgency, but this is a far from ideal world."

The Italian auction is the latest in a barrage of closely watched euro zone debt auctions as the crisis spreads beyond the bloc's weaker economies. An estimated 19 billion euros worth of debt is being auctioned this week, with Spain and France due to tap the market on Thursday.

The yield for the 10-year bonds was 7.56 percent, compared with 6.06 percent at a previous sale a month ago. Ten-year yields traded around 7.6 percent in the secondary market.

Italian government bond yields and German Bund futures fell, while European stocks and the euro rose after the auctions in a move strategists said was relief that the country managed to sell debt in volumes close to the upper end of its target range.

But concerns remain about the continuing rise in costs.

On Friday, Italy paid a euro lifetime high yield of 6.5 percent to sell new six-month paper at a poorly received auction, which sent two-year yields spiraling above 8 percent.

Pressure eased somewhat on Monday after a weekend report in Italian daily La Stampa that the International Monetary Fund was preparing a rescue plan worth up to 600 billion euros for Rome. An IMF spokesman denied the report.

MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS rose 1.6 percent, adding to Monday's jump of more than 2 percent. The index hit a seven-week low last Friday. Japan's Nikkei .N225 closed up 2.3 percent, moving further away from two-and-a-half year lows also hit last week. .T

U.S. stocks snapped a seven-session losing streak on Monday, partly supported by robust holiday sales, helping to buoy some Asian markets with export exposures to the United States, such as Korea and Taiwan, while defensives and beaten-down energy and materials sectors pulled Hong Kong and Shanghai shares higher.

"Some positive sentiment hit the markets which, after a recent steep decline, were offering good valuations and encouraging temporary buy back," said Hirokazu Yuihama, senior strategist at Daiwa Capital Markets.

Asian markets largely shrugged off a French media report citing several sources as saying Standard & Poor's could change the outlook of France's top-notch rating to "negative" within the next 10 days, but European share markets were set to dip.

Financial spreadbetters expected Britain's FTSE 100 .FTSE and Germany's DAX .GDAXI to open down 0.1 percent, and France's CAC-40 .FCHI to open down 0.4 percent. .EU

Euro zone finance ministers will meet later on Tuesday to approve detailed operational rules for the region's bailout fund, the European Financial Stability Facility (EFSF), paving the way for the 440 billion euro facility to draw cash from investors.

But with a history of initiatives that fall short of market expectations, analysts at Barclays Capital warned it would be premature to be confident that Europe's leaders are close to a solution to the 2-year-old debt crisis.

"So far, European summits have delivered compromise solutions that have been deemed either less than credible or too complex by markets," they said in a note.

"The recent round of proposals does not seem any different and suggests that investors should exercise caution buying risky assets, especially after a rally that has been aided by light market positioning."

ITALY AUCTION IN FOCUS

The euro inched up 0.3 percent to $1.3364 on Tuesday, after rising more than 1 percent on Monday to a high of $1.3398. The dollar index .DXY measured against six key currencies slipped 0.3 percent.

Commodities, a gauge for investor risk appetite, were steady after Monday's rally, with gold inching up 0.1 percent above $1,700 an ounce and oil steadying after a rise of more than $1 on Monday.

"We are fairly cautious, given very few reasons to be optimistic, and I doubt if optimism can be sustained throughout the week, especially with many meetings and bond supplies," said Frances Cheung, senior strategist for Asia ex-Japan at Credit Agricole CIB in Hong Kong.

Germany and France are reportedly working on proposals for a more rapid fiscal integration in Europe ahead of a European Union summit on December 9, but the European Central Bank has defied calls for a stepped-up role in helping resolve fiscal problems within the 17-member euro zone.

Concerns about the ability of the highly-indebted euro zone countries to pay off their ballooning public debt have made their sovereign bonds a prime target for market attacks, pushing yields to levels widely seen as unsustainable.

Market players were closely watching the outcome of this week's auctions, with up to nearly 19 billion euros in new bonds

expected to be issued by Belgium, Italy, Spain and France.

Italy plans a 8 billion euros bond sale later on Tuesday. Ten-year bond yields were stuck above 7 percent, a level that forced Greece, Ireland and Portugal to seek international aid.

Tension in euro zone money market and banks' reluctance to lend to each other further intensified on Monday, with three-month Euribor rates, traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending, rising to 1.477 percent from 1.475 percent.

Reflecting global market strains, the Bank of Japan supplied dollars in market operations for the fourth time this month on Tuesday, providing $100 million in an operation maturing in three months and $1 million maturing in a week.

(Editing by Alex Richardson)

President Barack Obama pressed European Union officials on Monday to act quickly and decisively to resolve their sovereign debt crisis, which the White House said was weighing on the American economy.

Underlining the threat to tottering European economies, ratings agency Moody's warned on Tuesday it could downgrade the subordinated debt of 87 banks across 15 countries on concerns that governments would be too cash-strapped to bail them out.

Rival Standard & Poor's could downgrade the outlook on France's top-level triple-A credit status within the next 10 days, signaling a possible ratings cut, a newspaper reported. The news briefly hit the euro.

White House spokesman Jay Carney said Obama's message, delivered to top EU officials behind closed doors in Washington, was that: "Europe needs to take decisive action, conclusive action to handle this problem, and that it has the capacity to do so.

Poland's Foreign Minister Radoslaw Sikorski made a dramatic appeal in Berlin on Monday for Germany to show more leadership in the euro zone crisis.

"You know full well that nobody else can do it," he said in a speech in the German capital, referring to efforts to save Europe's monetary union.

"I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity. You have become Europe's indispensable nation."

Tuesday's meeting of the Eurogroup, which brings together finance ministers from the 17 euro-zone members, was set to fix details of leveraging the European Financial Stability Fund (EFSF) so it can help Italy or Spain should they need aid.

They are also likely to approve the next tranche of emergency loans for Greece and Ireland.

Hopes that signs of concrete action could ease strains on the euro zone boosted markets, with Asian equities and the euro rising for a second day on Tuesday.

DETAILED PLANS

Documents obtained by Reuters on Sunday showed the detailed guidelines for the EFSF were ready for approval, opening the way for new operations and multiplying the fund's effective size.

The documents spell out rules for EFSF intervention on the primary and secondary bond markets, for extending precautionary credit lines to governments, leveraging its firepower and its investment and funding strategies.

"I would expect we will be in a position to approve the guidelines at a political level," a euro-zone official involved in the preparations for the ministers' meeting said.

The EFSF guidelines will clear the way for the 440 billion euro facility to attract cash from private and public investors to its co-investment funds in coming weeks.

The European Central Bank (ECB), which is now buying bonds of Spain and Italy on the market to prevent their borrowing costs running out of control, has been urging euro zone ministers to finalize the technical work on the EFSF quickly.

Officials have told Reuters that the leveraging mechanisms could become operational in January, but that may be too late.

With Germany rigidly opposed to the idea of the ECB providing liquidity to the EFSF or acting as a lender of last resort, the euro zone needs a way of calming markets, where yields on Spanish, Italian and French government benchmark bonds have all been pushed to euro lifetime highs.

ECB ROLE

The OECD rich nations' economic think-tank said on Monday the ECB should cut interest rates and abandon its reluctance to step up purchases of government bonds in order to restore confidence in the euro area.

The ECB shows no sign of doing so yet. It bought 8.5 billion euros of euro-zone government debt in the latest week, at a time of acute turmoil, in line with its previous activity but well short of what economists say is necessary to turn market sentiment around.

Sources have said the Obama administration has also urged Europe to allow the ECB to act as lender of last resort as the U.S. Federal Reserve does.

Germany and France stepped up a drive on Monday for coercive powers to reject euro zone members' budgets that breach EU rules, alarming some smaller nations who fear the plans by-pass mechanisms for ensuring equal treatment.

Berlin and Paris aim to outline proposals for a fiscal union before an EU summit on December 9 that is increasingly seen by investors as possibly the last chance to avert a breakdown of the single currency area.

"We are working intensively for the creation of a Stability Union," the German Finance Ministry said in a statement. "That is what we want to secure through treaty changes, in which we propose that the budgets of member states must observe debt limits.

Rumors about the threat to France's credit rating, which have circulated for several months, illustrate how the crisis has moved inexorably from indebted peripheral nations such as Greece and Portugal to the heart of Europe.

Economic and Financial daily La Tribune reported on its website that S&P's was preparing to change its outlook on France's sovereign rating from "stable" to "negative".

"It could happen within a week, perhaps 10 days," La Tribune quoted a source as saying.

The news coincided with the warning on subordinated debt from Moody's, which said the greatest number of ratings to be reviewed were in Spain, Italy, Austria and France, and knocked the euro a third of a cent before the currency recovered.

"Moody's believes that systemic support for subordinated debt in Europe is becoming ever more unpredictable, due to a combination of anticipated changes in policy and financial constraints," the agency said in a report.

Holders of subordinated debt are further back in the queue than owners of senior debt when it comes to a claim on a bank's assets, thus making it a riskier class of debt.

Mario Monti, Italy's prime minister and finance minister, will attend Tuesday's Eurogroup meeting to explain the reforms Italy plans to undertake to regain the confidence of markets.

Saddled with debt equal to 120 percent of GDP and soaring borrowing costs, Italy has been battling to avoid financial disaster, which analysts say would endanger the whole euro zone.

Italy must balance its budget by 2013 and offer immediate fiscal measures worth 11 billion euros if it wants to regain its credibility, according to a document on Italy that will be presented to the Eurogroup, Italy's La Repubblica newspaper said.

In a sign of intense market stress, short-term Italian yields last week climbed above those of longer-dated issues. Both are higher than the 7 percent level widely seen as unsustainable for the country's public finances.

The funding pressure is set to be underlined on Tuesday, when investors are expected to demand more than 7 percent at auction to buy three- and 10-year Italian debt.

(Additional reporting by Erik Kirschbaum in Berlin; Writing by Alex Richardson; Editing by Neil Fullick)

Trading was light, a sign skepticism remains high. Just 6.8 billion shares changed hands during the day on U.S. exchanges, below the daily average of 8 billion shares.

After the market's close, Fitch Ratings revised to negative the outlook on the United States' AAA credit rating after a special congressional committee failed to agree on at least $1.2 trillion in budget cuts.

Retailers were among the strong sectors following an robust start to the U.S. holiday shopping season. Record sales over the Thanksgiving weekend buoyed gains in large retailers, including Macy's, which rose 4.7 percent to $30.84.

The gains follow a seven-day string of losses on the benchmark S&P 500. The latest attempt to get the euro zone problems on the path to improvement involve a Franco-German push for tighter budgetary control over euro zone members.

Analysts say the move may not be followed by more buying without an actual plan for euro zone help.

"Unfortunately, these rallies are short-lived until real dollars or real euros are injected into the financial system," said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.

Germany and France pushed to acquire powers to reject national budgets in the euro zone that breach European Union rules ahead of an EU summit on December 9.

An Italian newspaper report suggested the International Monetary Fund was preparing a rescue plan for Italy, but the IMF denied the report.

The Dow Jones industrial average was up 291.23 points, or 2.59 percent, at 11,523.01. The Standard & Poor's 500 Index was up 33.88 points, or 2.92 percent, at 1,192.55. The Nasdaq Composite Index was up 85.83 points, or 3.52 percent, at 2,527.34.

Stock futures showed little movement after the announcement from Fitch, and analysts said it was probably expected by the market.

"I don't think we're going to see much of a market reaction. It's generally confirmation of what's been built into the market," said Fred Dickson, chief market strategist at The Davidson Cos in Lake Oswego, Oregon.

During the regular session, all 10 S&P sectors were up sharply, but energy and consumer discretionary stocks were among sectors with the biggest gains. The S&P energy index was up 3.6 percent, while the S&P consumer discretionary index was up 3 percent and S&P financials rose 3 percent.

Weak consumer spending has been a worry for investors, and the holiday period would likely confirm whether there's been any improvement in that area.

A report on consumer confidence in November, which is expected to have risen, is due Tuesday.

The S&P retail index advanced 3.1 percent, including Best Buy Co Inc, which added 3.4 percent to $26.49.

(Reporting by Caroline Valetkevitch; Editing by Kenneth Barry)

In a written opinion, Manhattan federal court judge Jed Rakoff said the proposed settlement was "neither reasonable, nor fair, nor adequate, nor in the public interest."

The rejection was not a surprise since the judge had made clear at a November 9 hearing that he had major problems with the proposal to settle a major securities fraud case arising from the financial crisis.

A spokeswoman for Citigroup declined to comment, pending a review of the decision. The U.S. Securities and Exchange Commission declined immediate comment.

The SEC accused Citigroup of selling a $1 billion mortgage-linked collateralized debt obligation, Class V Funding III, in 2007 as the housing market was beginning to collapse, and then betting against the transaction.

Rakoff wrote that it was difficult to discern "from the limited information before the court what the SEC is getting from this settlement other than a quick headline."

The settlement would have required the third-largest U.S. bank to give up $160 million of alleged ill-gotten profit, plus $30 million of interest. It also would have imposed a $95 million fine for the bank's alleged negligence, less than one-fifth what Goldman Sachs Group Inc paid last year in a $550 million SEC settlement over a different CDO.

"If the allegations of the complaint are true, this is a very good deal for Citigroup; and, even if they are untrue, it is a mild and modest cost of doing business," the judge said.

One Citigroup employee, director Brian Stoker, was also charged by the SEC. He is contesting those charges. Rakoff consolidated the two cases and set a trial date of July 16, 2012.

Rakoff wrote that the SEC "has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency's contrivances."

It was not the first time in recent years that Rakoff rejected a proposed SEC settlement with a major bank.

In 2009, he struck down a $33 million settlement with Bank of America Corp over the takeover of Merrill Lynch & Co, saying it punished shareholders who were victims of the alleged fraud. He later approved a $150 million accord.

The case is SEC v Citigroup Global Markets Inc, U.S. District Court, Southern District of New York, No. 11-07387.

(Reporting by Grant McCool; Editing by Derek Caney and Matthew Lewis)

Record numbers of shoppers spent billions of dollars in stores and online over the weekend on discounted televisions, toys and other goods. Stores opening earlier than ever, the usual deep discounts and more free shipping offers helped millions of shoppers shrug off economic concerns.

Best Buy Co Inc (BBY.N), Macy's Inc (M.N) and Wal-Mart Stores Inc (WMT.N) were seen by some analysts as strong performers over the big weekend. Best Buy and Macy's shares rose in premarket trading while Wal-Mart shares were flat.

Nice weather across much of the country also helped. It was the warmest Black Friday weekend in five years, with the least snowfall since 1999. In terms of rainfall, it was the driest Black Friday in five years, according to Planalytics.

"Favorable weather may have pulled spending forward while also shifting the mix of sales from online to stores," said Credit Suisse analyst Gary Balter.

On Monday, the spotlight shines on online sales. "Cyber Monday" is the biggest online shopping day of the year. Based on the growth seen over the weekend, it is expected to be another banner year online. On Black Friday itself, U.S. online retail sales jumped 26 percent, comScore data showed.

Overall, Thanksgiving weekend sales soared 16.4 percent to $52.4 billion, the National Retail Federation, an industry trade group, said on Sunday.

Investors will get a more detailed reading of results later this week, when some chains including Costco Wholesale Corp (COST.O), Macy's and Target Corp (TGT.N) issue their monthly sales tallies.

"I presume we're going to see strong numbers for November," said Sterne, Agee & Leach analyst Kenneth Stumphauzer.

Brian Sozzi, an independent analyst who follows retail stocks, said he expects many of those stocks to trade higher on Monday, but warned that discounts could come at a price for retailers.

"You have to remember that these were promotionally driven sales and there are still some margin issues," he said.

Wal-Mart was one of the clear winners, he said, along with Best Buy and even Wal-Mart rival Target.

"It's not an all Wal-Mart kind of world," Sozzi said.

Analysts cautioned that there could be a prolonged lull in sales until closer to Christmas.

Sozzi said he was looking beyond chains to other companies that likely benefited from retailers' sales, such as underwear and T-shirt maker Hanesbrands Inc (HBI.N).

"If Wal-Mart had such a strong performance in basic apparel ... you look at something like a Hanesbrands."

Black Friday deals are meticulously planned for months, but extended discounts were found across a wide range of apparel chains, which may suggest that early sales were coming in below plan, said Janney Capital Markets analyst Adrienne Tennant.

Chains such as Aeropostale (ARO.N), Gap Inc's (GPS.N) Banana Republic, bebe (BEBE.O), Charlotte Russe, Children's Place (PLCE.O), New York & Co (NWY.N), Pacific Sunwear (PSUN.O) and Chico's FAS Inc's (CHS.N) White House Black Market pushed their early deals throughout Friday, Tennant said.

At 9:30 a.m. on Friday, the Aeropostale store at Pennsylvania's big King of Prussia mall gave out makeshift coupons on paper, extending a 1:00 p.m. deadline for an additional 20 percent off to 5:00 p.m., and then that deadline was extended for the remainder of the day, Tennant noted.

Home Depot Inc (HD.N) may have had the upper hand among home improvement chains, as Balter noticed people shopping across the store, while at Lowe's Cos Inc (LOW.N) they appeared to concentrate on the doorbusters such as $99 drills.

Both Home Depot and Lowe's shares moved higher in premarket trade.

The NRF expects sales for the November-December holiday shopping season to rise 2.8 percent, slower than the 5.2 percent jump seen in 2010 and roughly in line with the average growth of 2.6 percent seen over the past decade.

(Reporting by Jessica Wohl and Brad Dorfman in Chicago, with reporting by Phil Wahba in New York; editing by John Wallace)

The threat of even more devastating downturns looms if the euro zone does not get to grips with its debt crisis and U.S. lawmakers fail to agree a spending-reduction plan, the Organization for Economic Cooperation and Development warned.

In the absence of decisive action from euro zone leaders, the European Central Bank (ECB) alone has the power to contain the bloc's crisis, the Paris-based OECD said. In the United States, however, the Federal Reserve had little ammunition left.

While solid growth in big emerging economies would provide a boost, slumping global trade would drag on Chinese output, the OECD said.

Its twice-yearly Economic Outlook forecast world growth would slow to 3.4 percent in 2012 from 3.8 percent this year.

That marks a sharp fall from its previous outlook in May, when the OECD estimated the world economy would grow 4.2 percent this year and 4.6 percent in 2012.

Struggling to contain an unprecedented debt crisis, the euro zone has already entered a recession and will eke out growth of only 0.2 percent in 2012, the OECD said, slashing its forecast from 2.0 percent in May.

CENTRAL BANKERS TO THE RESCUE?

The OECD said many key questions about the euro zone's response to the debt crisis remain unresolved, raising doubts about even the bloc's most solid economies, as demonstrated by Germany's difficulties placing bonds with investors last week.

"What we see now is contagion rising and hitting probably Germany as well," OECD chief economist Pier Carlo Padoan told Reuters in an interview.

"So the first thing, the absolute priority, is to stop that and in the immediate the only actor that can do that is the ECB," he added, urging the central bank to commit to a creating a cap on government bond yields as a way of calming the crisis.

With the Federal Reserve already flooding the financial system with liquidity, the U.S. central bank has even less room to act if the world's biggest economy hits a downturn. That prospect was made all the more real by the failure of Congress to agree a deficit-reduction plan, without which deep spending cuts would be triggered.

"The resulting fiscal tightening, which would come automatically, would in our view likely generate a recession in the United States," Padoan said.

Provided that the Congress does reach an agreement, then the U.S. economy is set to grow 1.7 percent in 2011 and 2.0 percent in 2012, down from May forecasts of 2.6 percent and 3.1 percent respectively.

With world trade growth projected to slow to 4.8 percent in 2012 from 6.7 percent this year, even China would not be spared a sharp slowdown, the OECD said.

It forecast that growth in the emerging Asian economic power would slow to 8.5 percent in 2012 from 9.3 percent in 2011.

Slower global trade and confidence knocked by the euro zone's debt crisis could trip up Germany, which the OECD estimated would grow only 0.6 percent in 2012 after a 3.0 percent expansion in 2011. Europe's biggest economy has probably entered a shallow recession at the end of the year, the OECD said.

In a rare bright spot, the Japanese economy was seen rebounding sharply after this year's earthquake and tsunami to achieve growth of 2.0 percent in 2012 following a contraction of 0.3 percent in 2011.

(Editing by Daniel Flynn and Catherine Evans)

Germany's original plan was to try to secure agreement among all 27 EU countries for a limited treaty change by the end of 2012, making it possible to impose much tighter budget controls over the 17 euro zone countries -- a way of shoring up the region's defenses against the debt crisis.

But in meetings with EU leaders in recent weeks, it has become clear to both German Chancellor Angela Merkel and French President Nicolas Sarkozy that it may not be possible to get all 27 countries on board, EU sources say.

Even if that were possible, it could take a year or more to secure the changes while market attacks on Italy, Spain and now France suggest bold measures are needed within weeks.

As a result, senior French and German civil servants have been exploring other ways of achieving the goal, one being an agreement among just the euro zone countries.

"The goal is for the member states of the common currency to create their own Stability Union and to concentrate on that," German Finance Minister Wolfgang Schaeuble told ARD television on Sunday.

Another option being explored is a separate agreement outside the EU treaty that could involve a core of around 8-10 euro zone countries, officials say.

An even more pressing decision faces euro zone finance ministers when they meet on Tuesday.

Detailed operational rules for the euro zone's bailout fund, the European Financial Stability Facility (EFSF), are ready for approval, documents obtained by Reuters showed.

The approval of the rules will clear the way for the 440 billion euro facility to attract cash from private and public investors to its co-investment funds in coming weeks, which, depending on interest, could multiply the EFSF's resources.

With Germany rigidly opposed to the idea of the ECB providing liquidity to the EFSF or acting as a lender of last resort, the euro zone needs a way of quickly calming markets, where yields on Spanish, Italian and French government benchmark bonds have all been pushed to euro lifetime highs.

Policymakers hope progress toward tougher fiscal rules will also assuage investors. Schaeuble said a Stability Union could be a decisive step to winning more confidence from the markets.

"That means that every euro zone member has to do its homework on its budget discipline. We want to ensure that through treaty changes," he said.

RADICAL OVERHAUL

Reuters exclusively reported on November 9 that French and German officials were discussing plans for a radical overhaul of the European Union to establish a more fiscally integrated and possibly smaller euro zone.

"The Germans have made up their minds. They want treaty change and they are doing everything they can to push for it as rapidly as possible," one senior EU official involved in the negotiations told Reuters. "Senior German officials are on the phone at all hours of the day to every European capital."

While Germany and France are convinced that moving toward fiscal union - which could pave the way for jointly issued euro zone bonds and may provide more leeway for the European Central Bank to act forcefully - is the only way to get on top of the debt crisis, some other euro zone countries are unable or unwilling to move so rapidly toward that goal.

Not only Greece, Ireland and Portugal, which are receiving EU/IMF aid, but also Italy and Spain and some east European countries such as Slovakia, would either find it difficult under current economic conditions to meet the budget constraints Germany wants, or simply do not agree with the aim.

Consequently, the French and German negotiators are exploring at least two models for more rapid integration among a limited number of euro zone countries, with the possibility of folding that agreement into the EU treaty at a later stage.

TWO MODELS

One is based on the Pruem Convention of 2005, also known as Schengen III, a treaty signed among 7 countries outside the EU treaty but which was open to any member state to join and was later acceded to by 5 more EU states plus Norway.

Another option would be to have a purely Franco-German mini-agreement along the lines of the Elysee treaty of 1963 that other euro zone countries could also sign up to, officials say.

"The options are being actively discussed as we speak and things are moving very, very quickly," a European Commission official briefed on the discussions told Reuters.

One source said the aim was to have the outline of an agreement set out before December 9, when EU leaders will meet for their final summit of the year in Brussels.

Sarkozy, who has made two speeches in the past two weeks highlighting the need for more rapid fiscal integration in the euro zone, and has acknowledged that it may be inevitable that a 'two-speed Europe' emerges, is due to make another keynote address on December 1 which could provide a platform for laying out in more detail the ideas that he and Merkel are developing.

A senior German government official denied there were any secret Franco-German negotiations, but emphasized that both countries saw the need for treaty change as pressing and were exploring how to achieve that in the best way possible.

"Germany and France are continuing to focus on proposals for a limited treaty change that can be presented at the EU summit in December," the official said, emphasizing that there was a need to act quickly to get changes in place.

The ECB has bought the bonds of euro zone strugglers in intermittent fashion when they have reached crisis point. Economists say it has to act much more radically to turn the market tide but the central bank, and Germany, has opposed any such move. Commitments to binding fiscal rules by euro zone governments may be the cover it needs to change tack.

"If this bond run is not stopped it will really endanger the stability of the European and even the global financial system. Bold action by the ECB is definitely needed," Peter Bofinger, one of the five "wise men" who formally advise the German government on the economy, told Irish state broadcaster RTE.

Reuters reported a similar possibility on Friday, with euro zone officials saying that if much tighter fiscal integration could be achieved among euro zone states, it would give the ECB more room to maneuver and buy sovereign bonds.

While EU officials are clear about the determination of France and Germany to push for more rapid euro zone integration, some caution that the idea of doing so with fewer than 17 countries via a sideline agreement may be more about applying pressure on the remainder to act.

By threatening that some countries could be left behind if they don't sign up to deeper integration, it may be impossible for a country to say no, fearing that doing so could leave it even more exposed to market pressures.

"Some of this is just part of the posturing you hear -- it's pressure from Germany to go for treaty change as quickly as possible," the official involved in the negotiations said.

"To some extent you have to see these ideas as part of the bargaining chips that are being put on the table."

(Reporting by Luke Baker, Julien Toyer in Brussels, Carmel Crimmins in Dublin, Matthias Sobolewski, Andreas Rinke, Erik Kirschbaum and Gernot Heller in Berlin, Writing by Luke Baker, editing by Mike Peacock)

The electronics retailer, which was one of the biggest losers in 2010, drew in shoppers by being one of the companies that opened its stores at midnight Thanksgiving night, and unlike in 2010, it focused more on having lower prices for big TVs and other popular items.

"Last year, they weren't as responsive with their pricing as they needed to be. We are seeing a different set of behaviors from them this time around," Lawrence Creatura, a portfolio manager at Federated Clover Investment Advisors, said.

Overall, shoppers will have spent a record $52.4 billion, up 16.4 percent from 2010, from Thursday through Sunday, according to a survey for the National Retail Federation, conducted by online research firm BIGresearch.

Many retailers opened at midnight or earlier on Thanksgiving, pulling in younger people who were willing to stay up late for deals on electronics and toys instead of getting up before dawn on Friday.

"Consumers have finite cash. If you can be the retailer who gets that cash first, you are likely to be more successful in the holiday selling season," Creatura said.

Aside from Best Buy, analysts and investors also named Macy's Inc and Wal-Mart Stores Inc among those that were strong starters.

"Best Buy's success is partially due to locking in compelling exclusive deals, better than Amazon's, and having unique in-store-only offers forcing the visit," Credit Suisse analyst Gary Balter said.

Lee Johnson, 46, shopping at a mall in El Segundo, California, bought a computer at Best Buy on Sunday.

He said online shopping is usually a better idea, but he needed the computer for an employee who is starting tomorrow.

"I just didn't have time."

Fifty million Americans visited online retail sites on Black Friday, representing an increase of 35 percent versus a year ago, and online retail sales in the United States on Black Friday jumped 26 percent this year, comScore data showed.

Each of the top five retail websites saw double-digit gains in visitors versus last year, led by Amazon.com. Wal-Mart ranked second, followed by Best Buy, Target and Apple, comScore said.

"Amazon.com once again led the pack, with 50 percent more visitors than any other retailer, while also showing the highest growth rate versus last year," comScore Chairman Gian Fulgoni said.

Amazon has used "every method at hand, old and new to promote their business this holiday season so far," WSL Strategic Retail CEO Wendy Liebmann said, referring to the online chains promotions in print, online and circulars.

About 122.9 million Americans plan to shop on Cyber Monday this year, up from the 106.9 million who shopped on Cyber Monday in 2010, NRF vice president Ellen Davis said on Sunday, citing a survey conducted by BIGresearch.

POTENTIAL LOSERS

Retailers that opened late or held the line on promotions failed to impress.

"Office supply seemed among the least busy as they opened later and had fewer high-profile deals than in years past," Balter said.

Retailers Gap Inc and Sears also "need to step up," Craig Johnson, president of consulting firm Customer Growth Partners said, adding that he worries the two chains may be too late already as the "horse is out of the barn."

"We would be most cautious on Sears due to their cash flow and serious appliance competition," Balter said.

The holiday shopping season that traditionally kicks off on Black Friday -- the biggest day of the year for retailers -- is closely watched by investors as consumer spending accounts for about 70 percent of the U.S. economy.

The National Retail Federation, an industry trade group, forecast a 2.8 percent increase in sales for the November-to-December holiday season, down from the 5.2 percent increase in 2010.

Despite the strong start, many remain skeptical if retailers will be able to maintain the sales momentum seen this weekend.

"One swallow does not a holiday season make. After the deepest recession in decades, the solid Black Friday weekend is welcome news, but we're only in the second quarter of a long playoff game," Johnson said.

(Reporting by Dhanya Skariachan in New York, Alistair Barr in San Francisco and Lisa Baertlein in Los Angeles; Editing by Brad Dorfman, Maureen Bavdek and Diane Craft)

(This version supercedes an earlier correction to fix the style for the spelling of comScore from ComScore. An earlier correction fixed the year and spelling of the National Retail Federation and BIGresearch in fourth paragraph. The errors were also in an earlier version of the story.)