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Food costs, the main driver of Chinese inflation, have picked up in recent weeks, showing that Beijing has its work cut out to keep a lid on price pressures.

But other important December data, from factory output to investment, painted a picture of stable expansion, suggesting the world's second-largest economy was free from overheating, despite the surprise jump in growth.

China's annual gross domestic product growth sped up in the fourth quarter to 9.8 percent from 9.6 percent in the third quarter, the National Bureau of Statistics (NBS) said on Thursday, defying expectations for a slowdown to 9.2 percent.

"Inflation pressure is intensifying into January and the tightening pressure will intensify, especially considering the stronger-than-expected fourth-quarter GDP growth," said Isaac Meng, economist with BNP Paribas in Beijing.

Although the growth and inflation figures had been published in advance by local media, China's main stock index shed 1 percent by 0303 GMT as investors viewed the strong set of data as bolstering the case for tightening.

Consumer prices rose 4.6 percent in December from a year earlier, slowing from a 28-month high of 5.1 percent in November but staying above forecasts for a steeper fall to 4.4 percent.

MORE TIGHTENING NEEDED

China has officially raised banks' required reserves seven times since the start of last year, with its most recent increase taking effect on Thursday.

But it has increased interest rates only twice during that time and some analysts warn that more forceful moves are needed.

The government is still debating the extent of credit curbs, and reports in recent days have pointed to a lower ceiling on bank lending than some investors had expected.

"Beijing still has more work to do to keep the economy on an even keel," said Brian Jackson, an economist with Royal Bank of Canada in Hong Kong. "Risks are skewed to more aggressive action."

In a sign that the gradual tightening thus far has started to bite, China's benchmark short-term money market rate spiked 194 basis points on Thursday, heading for its biggest single-day rise on record.

In month-on-month terms, the December numbers in fact registered a clear slackening of price pressures. Consumer prices rose 0.5 from the previous month, down from a 1.1 percent rise in November.

Beijing has also nudged the yuan higher against the dollar over the past week, but that mini-burst of appreciation has been seen as politically motivated, aimed at softening U.S. criticism of China's currency policy during President Hu Jintao's visit to Washington.

Traders said Asian sovereigns were again big buyers of the euro, forcing enough short-covering to help it outperform the U.S. dollar for the seventh session in the last eight. The euro climbed more than 1 percent to hit a session high of $1.3538 after slumping last week to a four-month low of less than $1.30 on worries that a debt crisis that had engulfed Greece and Ireland in 2010 would spread.

But solid bond auctions in Spain and Portugal have boosted spirits and talk that German officials were drafting contingency plans in case Greece defaults suggested they were working to prevent a deeper crisis.

"There is a growing sense of optimism that European leaders are finally getting their act together and working in a unified manner," said Samarjit Shankar, managing director of global foreign exchange strategy at BNY Mellon in Boston.

MSCI's all-country world index for stocks fell 0.5 percent, paring gains that had lifted the index earlier in the session to highs last seen in August 2008.

Stocks in Tokyo were poised to open lower, with the March futures contract that trades in Chicago for the Nikkei 225 down slightly by 10 points at 10,475.

The Standard & Poor's 500 Index suffered its biggest decline in nearly two months after disappointing results at Goldman Sachs Group Inc (GS.N) and Wells Fargo & Co (WFC.N).

Financials and technology stocks have fueled a surge that has pushed the benchmark index up nearly 10 percent since the start of December, leading some investors to say stocks are primed for a pullback.

"Even stocks here that are beating expectations are not acting favorably, so (for) the market it may be time for a pause, and that may be what we are seeing here," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

Groundbreaking for new U.S. homes fell more than expected in December to the lowest in over a year, the Commerce Department said.

The Dow Jones industrial average .DJI closed down 12.64 points, or 0.11 percent, at 11,825.29. The Standard & Poor's 500 Index .SPX fell 13.10 points, or 1.01 percent, at 1,281.92. The Nasdaq Composite Index .IXIC slid 40.49 points, or 1.46 percent, at 2,725.36.

The Dow's decline was limited by International Business Machines Corp (IBM.N), which climbed 3.4 percent following the release of strong earnings after the close on Tuesday.

Brent oil futures rose above $98 a barrel on supply concerns in the North Sea, but worries in the equity market about the economic recovery kept prices off the key $100 level and saw U.S. crude ease for a second day.

ICE Brent crude for delivery in March rose 36 cents to settle at $98.16 a barrel.

U.S. crude oil futures for February delivery fell 52 cents to settle at $90.86 a barrel, one day ahead of the contract's expiry, in relatively thin trade.

Its shares rose 2.4 percent after hours.

The company, which also owns fast-growing Web payments unit PayPal, exceeded Wall Street profit estimates for its holiday fourth quarter, helped by more items sold and at higher prices, and cited a "stabilized" macroeconomic environment.

"We're becoming a stronger, more competitive company," Chief Executive John Donahoe told analysts, citing innovation that has attracted more buyers due to a more convenient shopping experience.

"Customers shopped a dramatically different eBay in the fourth quarter of this year than a year ago. The shopping experience is now cleaner, faster and easier to navigate," he added.

EBay is in the last year of a three-year plan to turn around its marketplaces business, which connects online buyers with sellers.

"We were waiting for the turn and the turn has happened," said BGC Partners analyst Colin Gillis. "You see it in sold items as well as rebounding average selling prices. They're buying more items and they're also paying a bit more as well."

EBay, which pioneered the online auction, has hoped to prove that improvements to its site and user experience, including a more targeted search engine and daily deals, is encouraging traffic and delivering more consistent sales.

"Fourth quarter results and 2011 guidance should keep investors enthused about this name despite the recent run-up" in eBay's share price, said Jefferies analyst Youssef Squali, who also cited robust growth at PayPal and operating efficiency.

The stock was up 25 percent year over year at Wednesday's close.

For the full year, eBay expects adjusted earnings of $1.90 to $1.95 on revenue of $10.3 billion to $10.6 billion.

That compares with the $1.85 per share on revenue of $10.19 billion expected by Wall Street.

"As we enter 2011, we believe the overall macro environment has stabilized," said Chief Financial Officer Bob Swan.

EBay, like many companies dependent on consumer spending, had been hurt by economic uncertainty, posting tepid marketplaces sales as consumers cut back on nonessential items. But the company's third-quarter results showed momentum and executives cited stabilization of the U.S. market.

Net income for the fourth quarter was $559.2 million, or 42 cents per share, compared with $1.36 billion, or $1.02 per share, a year earlier.

Its shares rose 1.7 percent in after-hours trade.

EBay is in the last year of a three-year plan to turn around its marketplaces business, which connects online buyers with sellers.

"We were waiting for the turn and the turn has happened," said BGC Partners analyst Colin Gillis. "You see it in sold items as well as rebounding average selling prices. They're buying more items and they're also paying a bit more as well."

The company, which pioneered the online auction, is hoping to prove to shareholders that improvements to its site and user experience, including a more targeted search engine and daily deals, is encouraging traffic and delivering more consistent sales.

For the full year, eBay expects adjusted earnings of $1.90 to $1.95 on revenue of $10.3 billion to $10.6 billion.

That compares with the $1.85 per share on revenue of $10.19 billion expected by Wall Street.

Net income for the fourth quarter was $559.2 million, or 42 cents per share, compared with $1.36 billion, or $1.02 per share, a year earlier.

On an adjusted basis, eBay earned 52 cents per share, surpassing the 47 cents expected, on average, by analysts, according to Thomson Reuters I/B/E/S.

Revenue rose 5 percent to $2.495 billion, fueled by a 17 percent increase at its main marketplaces unit and a 25 percent rise at online payments unit PayPal. Total revenue was above the $2.488 billion Wall Street had been expecting.

Gross merchandise volume, a closely watched measure of the total value of goods sold, rose 6 percent, excluding vehicles, beating some analysts' expectations.

The company has been aggressively pushing its mobile platform, where consumers can use their smartphones to scan bar codes and compare prices with eBay's, in a bid to reach more users.

For the first quarter, eBay is expecting adjusted earnings of 44 cents to 46 cents per share on revenue between $2.4 billion to $2.5 billion.

Wall Street has been expecting earnings of 45 cents on revenue of $2.42 billion.

Ahead of eBay's earnings report, options traders took a bearish stance, with puts outnumbering calls among options slated to expire within three months.

Shares rose 1.7 percent to $29.60 after the results were reported.

(Reporting by Alexandria Sage; Editing by Steve Orlofsky)

The agreements included China's final approval of a $19 billion contract to buy 200 Boeing aircraft for delivery between 2011 and 2013, which U.S. officials estimated would support 100,000 American jobs.

"We value China's support for our products and its confidence in Boeing," said Jim Albaugh, CEO of Boeing Commercial Airplanes. "With the outstanding support provided by the United States Government, this deal is a win-win for the Boeing-China partnership which is approaching its 40th anniversary.

Other deals involved Honeywell (HON.N), Caterpillar (CAT.N) and Westinghouse Electric, a unit of Japan's Toshiba Corp (6502.T).

Chinese officials told the Obama administration that Chinese companies had signed 70 contracts worth $25 billion in U.S. exports from 12 states, U.S. officials said.

Altogether, the Boeing and other deals will support an estimated 235,000 American jobs, they said.

The deals appeared at least partly intended to answer U.S. criticism that China does not play by the rules as it amasses economic power and uses a number of policies to maintain a large trade surplus with the United States.

Although China is one of the fastest-growing export markets for the United States, that is overshadowed by imports from China that reached an estimated $370 billion in 2010.

The U.S. trade deficit with China was an estimated $275 billion last year, which would be a new record.

The senior U.S. official, who briefed reporters on condition of anonymity, said there was also progress on several key areas on trade, including intellectual property, indigenous innovation and government procurement.

'TRUMPED AIRBUS'

The $19 billion order for Boeing would be larger than a $15.6 billion deal for Airbus (EAD.PA) to sell 180 planes to Indian budget carrier IndiGo. That deal, announced on January 11, was touted as the biggest jet order in aviation history.

"So they've trumped Airbus," said Alex Hamilton, managing director of EarlyBirdCapital.

"Obviously there is a huge pent-up demand in China. ... This order highlights not only that but it also highlights the health of the overall cycle on the heels of the Airbus order."

Economist Derek Scissors of the Heritage Foundation think tank said he was less excited about summit-driven business.

Goldman, long known for generous payouts to employees, also said compensation would be down in 2010 from the prior year, but the decline is smaller than the drop in the bank's revenue.

Fourth-quarter profit roughly matched analyst estimates, but revenue fell short. Goldman shares were down 3.1 percent to $169.32 in premarket trading, and shares of other banks also declined.

"If Goldman Sachs can't show a strong performance, then good luck to anyone else trying," said Simon Maughan, an analyst at MF Global in London.

Quarterly net income after payment of preferred stock dividends totaled $2.23 billion, or $3.79 per share, compared with $4.79 billion, or $8.20, a year earlier. Net revenue fell 10 percent to $8.64 billion.

Analysts on average expected profit of $3.76 per share on revenue of $9 billion, according to Thomson Reuters I/B/E/S.

"If you're on the wrong side of the trade for even a couple days, that can hurt you substantially, and that seems to have been true for Goldman, as it was for Citi," said Gary Townsend, co-founder of Hill-Townsend Capital in Chevy Chase, Maryland, which owns Goldman stock.

CEO SEES GROWTH SIGNS

Goldman emerged from the recent financial crisis as it went in, as one of the most powerful but controversial U.S. banks.

Much recent attention has focused on its dealings with Facebook Inc, including a decision this week to limit a private offering of stock in the Internet social network company to non-U.S. investors.

Nonetheless, Goldman shares have held up far better than those of many rivals. Its shares closed Tuesday above where they were when the financial crisis exploded in September 2008.

Goldman's fourth-quarter net revenue in fixed income, currency and commodities slid 39 percent from the third quarter to $1.64 billion, reflecting what the bank called "generally low client activity levels."

Bond markets were unsettled during the quarter by uncertainty over European sovereign debt and the impact of the Federal Reserve's treasury-buying program.

Investment banking net revenue fell 10 percent in the quarter from what Goldman called a "strong" year-earlier quarter, though it increased 30 percent from the third quarter.

"Trading for their own account and investment banking are a big piece of what they do," said Malcolm Polley, chief investment officer at Stewart Capital Advisors.

Both San Francisco-based Wells Fargo & Co (WFC.N), the fourth-largest U.S. bank, and Minneapolis-based US Bancorp (USB.N) also both saw higher revenues contribute to healthy net income.

Compared with some of their chief rivals, both banks are showing more signs of recovering from the nearly 3-year-old financial crisis and recession.

US Bancorp posted a 61 percent jump in net income as the regional bank released $25 million in loan loss reserves. The move was the first by the company since the financial crisis began in 2008.

The bank's earnings per share of 49 cents beat analysts' estimates by 3 cents, according to Thomson Reuters I/B/E/S.

Wells Fargo posted a 21 percent increase in fourth-quarter profit, helped by double-digit revenue growth in multiple business units.

The bank said earnings rose to $3.4 billion, or 61 cents a share, meeting analysts' expectations.

Wells Fargo shares were down 1 percent at $32.15 in premarket trading, and U.S. Bancorp was down 1 cent at $27.30 as weak results from Goldman Sachs Group Inc (GS.N) pressured financial stocks overall.

(Reporting by Joe Rauch; Editing by Lisa Von Ahn)

* Strong earnings from the likes of Apple (AAPL.O) and IBM (IBM.N) have reinforced hopes of a strong corporate earnings season.

* Apple landed blockbuster results after markets closed on Tuesday and gave a strong outlook on dazzling sales of the iPhone and iPad, sending its shares up as much as 4 percent before paring gains.

* International Business Machines Corp's (IBM) quarterly profit blew past Wall Street estimates, and a long-hoped-for recovery in its services business raised optimism that global companies were confident enough to spend more on technology. IBM shares rose 2.7 percent in after-hours trading.

* A number of banks are scheduled to release results on Wednesday, including Goldman Sachs (GS.N) which analysts expect to report a fall in quarterly profit by roughly half due to the same adverse fixed income trading environment that hurt Citigroup's (C.N) results a day earlier.

* Goldman is likely to post earnings of about $3.76 per share, according to Thomson Reuters I/B/E/S.

* State Street (STT.N), U.S. Bancorp (USB.N), Bank of New York Mellon (FIBK.O) and Wells Fargo (WFC.N) are also set to report numbers on Wednesday, along with technology firm eBay (EBAY.O).

* U.S. stocks gained on Tuesday as investors focused on increased price targets for Google (GOOG.O), which reports later this week, and Dow component Caterpillar (CAT.N), whose results are due next week.

* Optimism about earnings has helped bolster stocks in recent weeks, with the S&P 500 .SPX posting its seventh straight week of gains on Friday.

* In company news, agribusiness giant Cargill Inc CARG.UL plans to spin off its $24 billion majority stake in Mosaic Co (MOS.N), a move that could eventually lead to a takeover of Mosaic, the world's second-largest fertilizer producer.

* Citigroup Inc (C.N) plans to name John Havens as president and chief operating officer as part of a structural overhaul to address the bank's efforts to expand, the Wall Street Journal said.

* Executives from General Electric (GE.N), Microsoft Corp. (MSFT.O), Goldman Sachs (GS.N), Coca-Cola KO.N., Boeing (BA.N), Intel Corp (INTC.O) and Carlyle Group CYL.UL will be among U.S. business leaders at a meeting on Wednesday hosted by U.S. President Barack Obama and Chinese President Hu Jintao, a White House official said.

* U.S. aircraft and defense firm Boeing (BA.N) is in talks with South Korea's Korean Air Lines (003490.KS), one of its 787 Dreamliner customers, on its delivery schedule, the head of its Korea unit said.

* On the economic front, weekly U.S. mortgage applications and chain store sales are expected at 6 a.m. EST and 6:45 a.m. EST respectively, while U.S. housing starts for December are due at 1330 GMT.

* In Europe, the pan-European FTSEurofirst 300 .FTEU3 index of top shares slipped 0.2 percent in early trade, pressured by weak banks.

(Reporting by Harpreet Bhal. Editing by Jane Merriman)

The annual survey by the American Chamber of Commerce in Shanghai, which bills itself as the "voice of American business" in China, comes as Chinese President Hu Jintao began a state visit to the United States.

China drew a record $105.7 billion in foreign direct investment last year, with inflows rising more than 17 percent from the previous year as global firms piled into the country to tap its vast and growing market.

An increasing number of U.S. companies in China expect higher revenue in 2011, but nearly two-thirds of the respondents in the survey said the regulatory environment had either remained stable or deteriorated over the past year.

Some 71 percent of respondents said that enforcement of intellectual property rights had stayed the same or deteriorated in 2010, up from 61 percent in 2009 and 64 percent in 2008.

"U.S. companies are concerned about the risk of rising protectionism and inadequate enforcement of intellectual property rights (IPR)," the survey said.

"IPR remains a top concern because U.S. companies perceive a lack of IPR protection and enforcement to be a blow to their competitive advantage and is costing U.S. companies billions of dollars in lost revenue each year."

China has arrested more than 4,000 people for violating intellectual property rights since November and will enforce tougher punishments to combat the "rampant" problem, a senior government official said last week.

U.S. and European corporations say recent crack downs have had little effect, with complaints about fake brand-name goods being overtaken by claims of Chinese firms assimilating more patent-heavy foreign technology.

High-speed trains, auto designs, mobile phones and wind turbines have all been the subject of vitriol about whether Chinese firms have stolen foreign companies' patents or whether the Chinese government has excluded foreigncompetitors by demanding that they hand over valuable patentsand designs.

The International Intellectual Property Alliance, which represents U.S. copyright industry groups, has estimated U.S. trade losses in China due to piracy at $3.5 billion in 2009.

HIGHER REVENUE

The Board of governors of the American Chamber of Commerce in Shanghai includes top company officials from the Chinese operations of Citibank, FedEx, Goodyear Tire & Rubber, APCO Worldwide, Corning and General Motors.

The American Chamber of Commerce survey was conducted from mid-November to early December 2010 and a total of 346 companies participated, with a 25 percent response rate.

The report said 71 percent of respondents expected their 2011 revenue to increase by at least 10 percent, up from 60 percent in a similar survey last year.