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The intervention by Senator Charles Schumer, a senior Democrat and a member of the Senate Banking Committee, is the latest indication that getting approvals for a deal on both sides of the Atlantic will not be easy.

Schumer told reporters he met with NYSE Euronext Chief Executive Duncan Niederauer -- who would lead the combined entity -- on Friday and again on Saturday.

He said he was told the deal "will give managerial control of the new operation to the team from NYSE, with Mr. Niederauer installed as the new CEO."

Hours later, the senator's spokesman Brian Fallon emailed Reuters to say that Schumer had not meant to communicate "greater knowledge of the arrangement beyond Niederauer as CEO."

The comments, which came on the day that NYSE Euronext's board met to discuss the proposed deal, touch on a particularly sensitive topic. The question of which managerial team, board and group of shareholders will end up in with the most power in a merger is controversial on both sides of the Atlantic.

In Germany, the deal is being sold as a German takeover of the NYSE or as a merger of equals. Any suggestion that the NYSE management team will be in control counters that public stance and could create an obstacle to the deal getting done.

Deutsche Boerse declined to comment on the remarks.

Bob Rendine, senior vice president for NYSE Euronext's global communications, declined to comment on the issue of management.

"We certainly have a lot of respect for Sen. Schumer. We're delighted that he is engaged with us on this issue," Rendine said. "We look forward to continuing keeping him up to speed on our progress, and on the potential benefits for New York and New York City."

NAME IS CRITICAL

The lawmaker emphasized that the name of the combined company -- and whether NYSE's name came before that of Deutsche Boerse -- was a "critical factor" in whether the proposed deal would win his support.

He says "NYSE" must have first billing for business and branding reasons, but also to reassure him that the combination is a true merger of equals.

"Some may say 'What's in a name?' but I say, 'A lot,' he said. "The New York Stock Exchange is a symbol of national prestige, and its brand must not suffer under this merger."

The New York Stock Exchange occupies a central role in America, Schumer said, its opening bell not unlike schoolchildren reciting the Pledge of Allegiance. For "the Germans" to place the NYSE name second calls into question whether the deal is a merger or a takeover, he said.

World finance chiefs head to Paris for a Group of 20 nations meeting on Friday and Saturday after weeks of preparatory discussions by their aides on topics such as global economic imbalances and the euro zone's debt troubles.

Now, Egypt's historic popular uprising could force them to debate broader geopolitical matters as well.

"It's broken a psychological barrier not just for North Africa but across the Middle East," said Anthony Skinner, an analyst at Maplecroft, a political risk consultancy. "You could see some contagion in terms of protests; Morocco, perhaps Jordan, Yemen."

What happens next after the overthrow of President Hosni Mubarak? Could the unrest spread to other countries? What are the implications for global growth?

Answers will not be immediately forthcoming. After the jubilation in Cairo, it is impossible to know what the next phase of Egypt's political transition will bring.

That is likely to keep pressure on financial markets, the recovery of which has underpinned hopes for U.S. economic growth.

"There isn't any greater visibility. We know what we don't have, which is Mubarak, but we don't know what we do have," said Julian Mayo, investment director at Charlemagne Capital.

Another prominent subject for economy watchers around the world is inflation, particularly with a report on U.S. consumer prices due on Thursday.

A two-speed global recovery, with emerging markets racing ahead as the developed world stumbles forward, has led to vastly divergent paths of inflation and plenty of trading of blame between governments for each other's economic problems.

In particular, policymakers in key economies like South Korea and Brazil have charged the Federal Reserve's ultra-low interest rate policy with artificially boosting their currencies and making exports less competitive.

Conversely, the Fed argues China's unwillingness to let its currency float means it -- not the U.S. central bank -- is responsible for the excessive foreign exchange adjustments taking place in other countries.

If recent history is any guide, the G20 communique is unlikely to offer concrete progress on addressing a perceived shortage of savings in rich countries, coupled with weak domestic spending in emerging nations.

Analysts expect some headway by selecting key indicators that can help policymakers identify imbalances early.

DE-INFLATION

Mubarak handed power over to the army, bowing to escalating pressure from the military and protesters demanding he goes. His departure was seen partially reviving investors' appetite for risk.

This also helped copper climbed above $10,000 a tone, while the dollar came under some pressure.

The Nikkei .N225 climbed 0.8 percent after data showed Japan's economy shrank slightly in the final quarter of last year but beat forecasts for a bigger contraction. Analysts expect a recovery this year on stronger exports to China and other parts of fast-growing Asia.

"What with good corporate earnings, the resignation of Mubarak and other helpful factors, the investment environment is good," said Yoshihiro Ito, chief strategist at Okasan Online Securities.

Stocks elsewhere in Asia .MIAPJ0000PUS gained 1.2 percent with Australia's S&P/ASX 200 index .AXJO up 1.0 percent. South Korea's KOSPI .KS11, Hong Kong's Hang Seng Index .HSI and China's Shanghai Composite index .SSEC were all more than 1 percent higher.

Talk of slower-than-expected inflation in China, a day ahead of the official release, also helped shore up the Chinese market.

Traders said the consumer price index may have risen 4.9 percent in the year to January, well below the consensus forecast of 5.3 percent.

Last week, the MSCI Asia Pacific equity index, excluding Japan, fell 2.65 percent, suffering its biggest weekly drop since August 2010.

Questions over whether officials in emerging economies will succeed in tackling inflation have prompted investors to pull out some $3 billion from Emerging Markets Equity Funds tracked by EPFR Global in the week ended February 9.

This marked a third straight week of outflows and was the worst three-week run in three years, the fund tracker said.

But Japanese equities, which lagged the region last year, saw some of the best inflows. Japan still has a low price-to-book ratio of 1.2, according to Thomson Reuters StarMine, among the most attractive in Asia. This compares with 2.0 for Hong Kong and 2.5 for Australia.

"Investors are seeing value in Japanese exporters geared to fast growing regional emerging markets where the yen's value versus the dollar is not an issue. Inflation is also not an issue for the world's third largest economy," the fund tracker said.

The dollar slipped against the euro and the yen. Traders said Japanese exporters have been active sellers of the greenback, taking advantage of the dollar's rise to three-week highs late last week.

The dollar index .DXY, which tracks the greenback's performance against a basket of major currencies, slipped 0.14 percent.

U.S. crude oil was a touch firmer at $85.60, but still not far off a 10-week low of $85.10 plumbed last Friday. Spot gold was little changed at $1,357.20 an ounce.

(Additional reporting by Taiga Uranaka in Tokyo; Editing by Daniel Magnowski)

Gross domestic product (GDP) shrank 0.3 percent in October-December from the previous quarter, slightly less than a 0.5 percent fall expected by markets but still the first contraction in five quarters.

That translated into an annualized contraction of 1.1 percent, far worse than U.S. growth of 3.2 percent in the same quarter, although analysts blame the weakness mostly on a temporary hit to consumption after the September expiry of government incentives to buy low-emission cars.

"The data confirms that the economy entered a lull on a downturn in private consumption, but recent monthly economic indicators such as output and exports show it is unlikely that the lull will be prolonged," said Yoshiki Shinke, senior economist at Dai-ichi Life Research Institute.

"The economy will continue to depend on external demand for growth, as domestic demand is likely to be capped by subdued income growth and the anticipated negative impact from the expiry of subsidies for energy-efficient electrical appliances."

CHINA THE NEW NO.2

The latest GDP figures also confirmed that China overtook Japan as the world's second-largest economy in 2010 on a seasonally unadjusted, nominal dollar basis, at $5.8786 trillion against $5.4742 trillion.

Economics Minister Kaoru Yosano said Japan needed to make the most of China's growth to boost its own fortunes, as it increasingly relies on demand from its Asian neighbor.

"The fact that China's economy is booming is welcome news for Japan as a neighboring country," Yosano told reporters. "We want to deepen the amicable economic relationship between Japan and China."

Japan's shipments to mainland China accounted for 19.4 percent of its overall exports last year, making it the No.1 destination for Japanese goods, followed by the United States at about 15.4 percent.

While recent data showed exports and industrial output rose more than expected in December, a pick-up in the corporate sector is seen unlikely to spill over to personal consumption, which makes up about 60 percent of GDP.

Capital expenditure rose 0.9 percent from the previous quarter, slower than the 1.5 percent pace of gains in July-September.

Private consumption, on the other hand, fell 0.7 percent from the previous quarter after a 0.9 percent increase in July-September.

Analysts expect personal consumption to remain weak due to sluggish wages and the roll-back of government incentives for purchases of energy-efficient household electronics in December.

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