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The diverging views, on display at the start of a meeting of the Group of 20 leading economies, underscored the difficulty Sarkozy faces to meet his goal of drafting a blueprint for the overhaul of the global monetary order by the end of the year.

"Without rules, the international monetary and financial system is incapable of forestalling crises, financial bubbles and the widening of imbalances," Sarkozy told a gathering of finance ministers, central bankers and prominent academics.

"Without rules and supervision, the world runs the risk of being condemned to increasingly serious and severe crises."

France is the chairman this year of the G20, which brings together developed and emerging economies accounting for some 85 percent of global output.

Beijing, despite being asked to host the forum, has not shown great enthusiasm for the initiative or for Sarkozy's broad plans for reform. China fears the thinly veiled aim is to force it to let the yuan trade more freely and to dismantle its capital controls more quickly than it wants to.

"The reform process will be long-term and complex," Chinese Vice-Premier said in his opening remarks.

TALKING SHOP

The meeting in the eastern city of Nanjing is billed as a seminar to air ideas, not to take decisions.

In that spirit, Sarkozy asked whether it was not time to broaden the Group of Seven industrial countries, one of whose principal purposes is to police the global currency markets.

The group reasserted its role earlier this month when G7 central banks acted in concert to sell the yen. In doing so, it reversed a surge in the currency that threatened to deepen the damage to Japan's economy, already reeling from a devastating earthquake on March 11.

A senior German official, who declined to be identified, said Berlin was also in favor of currency questions being addressed by a broader group than the G7, perhaps incorporating the four BRIC countries -- Brazil, Russia, India, China -- along with Mexico.

But U.S. Treasury Secretary Timothy Geithner questioned whether an international effort was really needed to cure the ills in the global monetary system. Inconsistency in exchange rate policies was the biggest flaw, he said.

Without naming China, he noted that some emerging countries ran tightly managed currency regimes that fueled inflation risks in their own economies, magnified appreciation pressures in others and also generated calls for protectionism.

"This asymmetry in exchange rate policies creates a lot of tension," Geithner said. "This is the most important problem to solve in the international monetary system today."

David Sokol's resignation is a reputational blow for Buffett, the 80-year-old "Oracle of Omaha," who prides himself on his folksy fair-dealing image and handpicks managers who can run businesses in a similarly transparent manner.

"Obviously Warren Buffett prides himself on transparency and this would not appear to be transparent," said Berkshire shareholder Michael Yoshikami of YCMNET Advisors in California. "It's surprising and always amazes me these types of events occur because it just seems so unnecessary."

Buffett said he did not think Sokol broke the law and that Sokol resigned because he wanted to create a family business of his own and devote more resources to philanthropy.

Nonetheless, the sequence of events raises questions about conflicts of interest and the strength of Berkshire's internal controls.

Berkshire's actively traded Class B shares fell 3 percent after-hours.

Buffett said on Wednesday that Sokol bought shares of Lubrizol last December, sold them, then bought more shares in early January.

Sokol subsequently presented Buffett with the idea of buying the company, and made what Buffett called a "passing remark" that he owned some Lubrizol stock. Buffett said he did not probe Sokol's stock ownership further.

The 96,060 shares Sokol bought on January 5-7 would have generated a profit for him of at least $2.98 million based on Lubrizol's share price over those three days and the price at which Buffett agreed to buy the company.

It is unclear why news of Sokol's trading is surfacing now, or whether government investigators have looked into the matter. The U.S. Securities and Exchange Commission and the Department of Justice declined to comment.

Sokol defended himself in an interview with Fox Business that ran late Wednesday.

"There was no inside information. The only reason Warren Buffett mentioned it in the release is because it would have to be brought up anyway when Berkshire put the purchase up for a vote. It's a disclosure issue," he said.

SURPRISE MOVE

Buffett took pains in his statement Wednesday to make clear that he did not fire Sokol, and that Sokol offered his resignation after having asked twice before in recent years to retire. Buffett said he discovered the extent of Sokol's Lubrizol holdings on March 19, but insisted the March 28 resignation came as a surprise.

Nonetheless, a recent regulatory filing by Lubrizol makes clear Sokol had the idea of buying Lubrizol well before taking it to Buffett.

Using Thomson Reuters StarMine data, Reuters Insider compiled a list of more than 80 companies that met Buffett's basic criteria -- namely industry leaders with strong balance sheets that are available on the cheap.

Names like ITW, Cliffs and Eaton feature on the list, along with high-profile international names like Rolls-Royce Group (RR.L) and AkzoNobel. (AKZO.AS)

All of them are trading at enough of a discount to analysts' expected earnings growth for the next five years that Buffett could pay a 20 percent premium and still be getting value in the deal.

"He always wants a simple defensible durable business that will still be here and still be on top of its game in 25 years," said James Armstrong, president of Henry H. Armstrong Associates, which manages about $400 million, around a quarter of which is invested in Berkshire.

The Reuters Insider analysis focused on companies with market capitalizations in the $10 billion to $30 billion range that meet Buffett's publicly stated criteria for deals, including a history of profitability and little debt.

MORE CAPACITY TO DEAL

Buffett made a splash earlier this month in buying lubricant maker Lubrizol Corp (LZ.N) for $9 billion, extending the trend of Berkshire Hathaway's (BRKa.N) recent investments in basic industries.

The deal is Berkshire's biggest since it bought Burlington Northern Santa Fe for more than $26 billion in late 2009, but Buffett is still on the hunt for big deals.

In Berkshire's annual report, Buffett said he is on the lookout for possible acquisitions -- making references to going big-game hunting with an elephant gun.

The company had amassed a cash pile of about $38 billion by the end of last year. When Goldman Sachs (GS.N) buys preferred shares back from Berkshire, the insurance company will pick up an additional $5.5 billion.

"Lubrizol changes his acquisition profile by zero," said Glenn Tongue, managing partner who helps manage around $200 million at T2 Partners.

Tongue estimates that after the Lubrizol deal, Berkshire will still have more than $50 billion of cash on hand at the end of 2011 if the company does not do any more acquisitions.

"He characterized the acquisition exercise as elephant hunting. Lubrizol is not an elephant -- I wouldn't be surprised if he announced an acquisition larger than Burlington Northern this year," Tongue said.

SPECIFIC CRITERIA

Allen, who now runs a Seattle-based investment firm and philanthropic foundation, makes the claim in a forthcoming book of memoirs, excerpts from which were published in Vanity Fair magazine on Wednesday.

Allen, 58, says he overheard a heated conversation between Gates and now Chief Executive Steve Ballmer in December 1982, shortly after Allen told them he was thinking of leaving the company.

"It was easy to get the gist of the conversation," writes Allen in the memoir as reproduced in Vanity Fair. "They were bemoaning my recent lack of production and discussing how they might dilute my Microsoft equity by issuing options to themselves and other shareholders. It was clear that they'd been thinking about this for some time."

Allen, who at that time was receiving treatment for Hodgkin's lymphoma cancer, and was scaling back his work at Microsoft, says he later received apologies from both Gates and Ballmer over the incident.

Allen, who made up the name Microsoft, co-founded the company with Gates in 1975. Two years later, he and Gates agreed to take 36 and 64 percent shares in the company respectively, Allen says in the book, owing to Gates' greater contribution to their first coding job for the new Altair computer, which turned out to be the company's first big break.

The two men's holdings in Microsoft were later diluted as more people joined the company and it issued shares publicly in 1986.

As the company grew, the two clashed over the hiring of Ballmer -- a friend of Gates' from Harvard -- to lead sales and marketing efforts in 1980.

Allen claims in the book that they agreed to give Ballmer no more than 5 percent equity in the company, but says Gates went behind his back to offer Ballmer 8.75 percent.

"It was bad enough that Bill had chosen to override me on a partnership issue we'd specifically discussed," says Allen in his book. "It was worse that he'd waited till I was away to send the letter."

Allen says Gates eventually made up the extra equity given to Ballmer from his own share. Ballmer became CEO in 2000, and is the second-largest individual shareholder behind Gates.

Before he left Microsoft in 1983, Allen claims Gates attempted to buy his shares from him at a bargain price.

"It's not fair that you keep your stake in the company," Allen reports Gates as saying, making what Allen described as a "lowball" offer of $5 a share for his stock. Allen says he wouldn't go below $10. As a result, Allen says he kept his share.

"As it turned out, Bill's conservatism worked to my advantage. If he'd been willing to offer something close to my asking price, I would have sold way too soon," says Allen in the book.

Gates, who has recently been traveling in India working on his own philanthropy projects, did not directly contest Allen's account, but sought to play down friction.

"While my recollection of many of these events may differ from Paul's, I value his friendship and the important contributions he made to the world of technology and at Microsoft," Gates said in an emailed statement.

U.S. private employers added 201,000 jobs in March, according to the ADP Employer Services report. The figure was largely in line with expectations for a gain of 203,000 jobs. The report is jointly developed with Macroeconomic Advisers LLC.

February's figure was revised down to 208,000 from 217,000.

"Basically the number was very much in line with expectations and shows that the labor recovery continues at a reasonable pace," said David Katz, chief investment officer at Matrix Asset Advisors in New York.

"It looks like the U.S. economic recovery continues, and the improving labor market should be a buffer against weak areas like real estate."

The ADP figures come ahead of the government's much more comprehensive labor market report on Friday, which includes both public and private sector employment.

That report is expected to show the economy created about 190,000 jobs in March based on a Reuters poll of analysts, while private payrolls are forecast to rise by 200,000.

A separate report on Wednesday showed the number of planned layoffs at U.S. firms fell in March after spiking up the month before. Employers announced 41,528 planned job cuts this month, down 18 percent from the 50,702 cuts announced in February, according to the report from consultants Challenger, Gray & Christmas, Inc.

Overall, 130,749 job cuts were announced in the first three months of the year, marking the lowest rate of downsizing since 1995.

The highest level of job reductions this year has been seen in the government sector, the report noted. Losses are expected to grow as cash-strapped state and local governments deal with budget problems.

U.S. Treasury prices rose modestly immediately after the ADP data and the U.S. dollar trimmed gains against the euro and yen, while U.S. stock index futures remained higher.

Economists often refer to the ADP report to fine-tune their expectations for the government monthly payrolls numbers, though it is not always accurate in predicting the outcome.

The slow recovery in the jobs market has been one of the biggest hurdles to a sustainable economic recovery, but recent data has raised optimism that improvement in employment is strengthening.

Housing, however, has remained outside of the broader recovery. The Mortgage Bankers Association on Wednesday reported that applications for U.S. home mortgages tumbled last week as higher interest rates sapped demand for loan refinancing.

(Reporting by Leah Schnurr, additional reporting by Ryan Vlastelica and Edith Honan; Editing by Leslie Adler)

The data was largely in line with expectations. Economists surveyed by Reuters had forecast the ADP Employer Services report would show a gain of 203,000 jobs. The report is jointly developed with Macroeconomic Advisers LLC.

February's figure was revised down to 208,000 from 217,000.

"Basically the number was very much in line with expectations and shows that the labor recovery continues at a reasonable pace," said David Katz, chief investment officer at Matrix Asset Advisors in New York.

"It looks like the U.S. economic recovery continues, and the improving labor market should be a buffer against weak areas like real estate."

U.S. Treasury prices rose modestly immediately after the data and the U.S. dollar trimmed gains against the euro and yen, while U.S. stock index futures remained higher.

The ADP figures come ahead of the government's much more comprehensive labor market report on Friday, which includes both public and private sector employment.

That report is expected to show the economy created about 190,000 jobs in March based on a Reuters poll of analysts, while private payrolls are forecast to rise by 200,000.

Economists often refer to the ADP report to fine-tune their expectations for the payrolls numbers, though it is not always accurate in predicting the outcome. (Reporting by Leah Schnurr, additional reporting by Ryan Vlastelica)

Valeant, formed when Canada's Biovail bought U.S.-based Valeant in September for $3.3 billion and took its name, said it planned to propose a slate of directors to replace Cephalon's board with its own nominees.

The $73-a-share bid, which Valeant expects to finance entirely with debt, represents a 24 percent premium over Cephalon's closing share price of $58.75 on Tuesday, and about a 29 percent premium over the U.S. drugmaker's 30-day trading average.

Valeant Chief Executive Michael Pearson said Cephalon in meetings between the companies signaled a belief that its shareholders would not find the Valeant offer compelling. But he plans to talk to Cephalon shareholders directly beginning next week.

"We'd love to do this on a friendly basis and if we get a clear signal that their shareholders are not interested, there's many other things that we can do and we'll move on. We don't have to do this deal," Pearson told Reuters in a telephone interview.

"In next few weeks we'll get a good sense. This is not going to be a long process," Pearson said.

Cephalon shares rose to $72.89 in extended trading after the Valeant bid was announced. Valeant climbed to $51.00 from a close of $44.39 on the New York Stock Exchange.

Pearson said Valeant would consider raising its offer if allowed to do due diligence.

"There will be a lot of pressure on them to at least open their books to due diligence," David Maris, an analyst with Credit Agricole Securities, said of Cephalon management.

"Prior to this offer, we believe Cephalon was fundamentally undervalued," he added.

Cephalon said in a statement its board would consider the Valeant offer, as well as a separate offer it made to acquire Cephalon's non-oncology related assets for $2.8 billion.

The U.S. drugmaker said it will respond to Valeant next week. It advised its shareholders to await that response and said they do not need to take any action regarding Valeant's proposal.

In Cephalon, Valeant would gain a company with strong cash flow, a growing cancer drug in Treanda and several other products, a branded generics business that would fit in with its own, and a promising pipeline of drugs in development.

Pearson, whose company also sells dermatology and neurology products, said it would seek partners for Cephalon's experimental drugs "to diversify the risk and reduce the spend on the R&D side."

Valeant predecessor Biovail has a checkered history that the Cephalon board may take into consideration.

Automatic Data Processing (ADP) is set to release its March employment report at 1215 GMT (8:15 a.m. ET). Economists in a Reuters survey expect 203,000 jobs were created in March versus 217,000 new jobs in February. The figures will give an indication about Friday's widely watched nonfarm payroll numbers.

The Mortgage Bankers Association will release the Weekly Mortgage Market Index for the week ended March 25 at 1100 GMT. The mortgage market index read 524.4 and the refinancing index was 2,471.2 in the previous week.

U.S. chemicals company DuPont (DD.N) extended its $6 billion takeover bid for Denmark's Danisco (DCO.CO) by four weeks and said shareholders of 6 percent of Danisco's stock had accepted the offer.

Challenger, Gray & Christmas Inc will release its report on job cuts for March at 1130 GMT. Challenger reported 50,702 layoffs in the previous month.

Family Dollar's (FDO.N) quarterly earnings report will show how well the company did in keeping shoppers coming back to its nearly 6,900 stores.

TIBCO Software Inc (TIBX.O) fell 7.2 percent after the bell on Tuesday as its first quarter results and outlook failed to impress investors.

Japan upgraded its safety standards for nuclear power plants, the first official acknowledgement that norms were insufficient when an earthquake wrecked one of its facilities, triggering the world's worst atomic disaster since Chernobyl in 1986.

Toyota Motor Corp (7203.T) and Honda Motor Corp (7267.T) took fresh steps to scale back production or reduce orders of some parts in North America as supplies remain disrupted after the March 11 Japan earthquake.

Brent crude was steady near $115 on Wednesday, after falling as much as 0.6 percent on indications that higher fuel prices were weighing on consumer confidence in top user the United States, where crude inventories rose more than expected last week.

European shares hit a three-week high on Wednesday, with the pan-European FTSEurofirst 300 .FTEU3 index of top shares rising 0.9 percent.

Japan's Nikkei stock average .N225 rose 2.6 percent, hitting its highest since a post-quake panic sell-off, as the yen softened against the dollar, but investors said the gains may be short-lived as bargain hunting by foreigners winds down.

On Tuesday, the Dow Jones industrial average .DJI and the Standard & Poor's 500 .SPX both rose 0.7 percent, while the Nasdaq Composite .IXIC added 1 percent.

(Reporting by Atul Prakash; Editing by Hans Peters)

Although not an official policy statement, the paper by Xu Hongcai, a department deputy director at the China Center for International Economic Exchanges, offered a window onto the domestic pressures bearing on Beijing to move away from a dollar-centric global economy.

The China Center, a top government think tank, has represented the Chinese government in organizing a forum on Thursday in Nanjing that will bring together finance ministers, central bankers and academics from the Group of 20 wealthy and developing economies.

Xu's paper, "Reform of the international monetary system under the G20 framework," was published in Chinese on the center's website this week (www.cciee.org.cn).

"Nations around the world have no way of restricting dollar issuance by the Federal Reserve. The current international monetary system lacks both stability and fairness," Xu wrote.

He said the global monetary system had fallen into a "dollar trap." While it would be sensible to reduce dollar holdings in official currency reserves, nations cannot easily cut back, because doing so would only lead the dollar to weaken and so hit the value of their assets, he said.

CHINA'S DILEMMA

China's dollar dilemma is particularly acute, though Xu did not say as much. China had $2.85 trillion in foreign exchange reserves at the end of last year, more than any other country. About two-thirds are estimated to be invested in dollars.

Beijing has repeatedly warned that loose U.S. monetary policy threatens the dollar, but it has continued to accumulate dollar assets at the same time, adding about $260 billion of Treasury securities last year, according to U.S. data.

With the Chinese government determined to limit yuan appreciation, it must buy a large amount of the dollars streaming into the country from its trade surplus and recycle those into U.S. investments.

Xu was not shy about proposing ways to remake the global monetary system.

For a start, he said diversification was needed, with several reserve currencies. Other countries could reinforce these currencies' status by buying or selling them to keep their exchange rates stable, Xu said.

He said the International Monetary Fund should also play a policing role.

"If any international reserve currency depreciates, the IMF would be responsible for issuing a timely alert, increasing international pressure to force the country in question to take measures to stabilize its currency," he said.

LITTLE SUPPORT

Xu's call for regular intervention to keep key currencies steady is unlikely to find much support among developed economies, which have come to view a system of floating, largely market-determined exchange rates as the most stable underpinning of the global economy.

Renewed demand for shares came despite concerns the global economy could be hurt by Japan's struggle to contain the world's worst nuclear crisis in decades, conflicts in Libya and the Middle East and Europe's festering sovereign debt problems.

Concerns over those risks have eased, for now, with expectations that stocks worldwide will move higher into the new quarter, analysts and traders said.

"Global equities are stronger and it's risk-on again," a trader at a U.S. investment bank said.

Japan's Nikkei index .N225 rose 2.4 percent in afternoon trading, after two days of losses. So far in March, it has shed 8.8 percent, heading for its worst month since May 2010. Year to date, the benchmark has fallen 5.3 percent.

Among individual stocks, Tokyo Electric Power (9501.T) was the spotlight again, tumbling nearly 18 percent on concerns that the operator of the quake-stricken nuclear reactors in northeastern Japan may be nationalized.

Other Asian equities have recovered from their losses since a devastating earthquake and tsunami hit northeast Japan on March 11. MSCI's index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 1.5 percent on the day. It has risen 4.0 percent so far in March and up 0.6 percent this year.

MSCI's world index .MIWD00000PUS rose 0.3 percent, taking its gains for the year so far to more than 3.1percent, with weakness in Asia offset by strong gains early in the year in major indexes in the United States and Europe as investors rotated from emerging markets to large, developed ones.

The yen dipped to a 10-month low against the euro and neared a three-week trough versus the dollar early in Asia, having suffered broad losses after several chart support levels were breached plus expectations of rising rates in Europe and United States.

In recent days, several top U.S. central bank officials said further bond purchases by the Federal Reserve were not needed to support the economy, while European Central Bank President Jean-Claude Trichet signaled his inflation concerns because of rising food and energy prices.

SHIFT TO GRADUAL POLICY TIGHTENING

"We've had comments from the Fed and a shift in sentiment toward the U.S. policy from a rate perspective that has really pushed U.S.-Japan yield differentials, driving the dollar higher," said Mitul Kotecha, head of global FX strategy at Credit Agricole in Hong Kong.

The yield gap between two-year U.S. and Japanese government debt has ballooned over the past 1- weeks to a tad more than 61 basis points, the widest since early February.

Two-year U.S. Treasury yields, which are most sensitive to traders' views on changes in Fed policy, hovered at their highest in six weeks at 0.83 percent on Wednesday, while two-year JGB yields have bounced in a tight range of 0.18 percent to 0.25 percent so far this year.

Traders have been adjusting their books and most investors have moved to the sidelines in advance of the last day of the quarter and Japan's fiscal year. Light volume has heightened intraday volatility across financial markets.

Another report on Tuesday showed home prices fell for a seventh straight month in January but held above their post-housing bust low of April 2009.

The reports added to signs the U.S. economy lost momentum in early 2011, although the impact of high energy prices -- aggravated by unrest in Middle Eastern countries -- is likely to be temporary, economists said.

They point to an improving labor market as underpinning growth.

"We are likely looking at a continuing pattern of 'two steps forward, one step back' in terms of the collective mood, given the sources of uncertainty and risk that will not be easily resolved," said Jim Baird, a partner at Plante Moran Financial Advisors Kalamazoo, Michigan.

The Conference Board, an industry group, said its index of consumer attitudes fell to 63.4 in March after hitting a three-year high of 72.0 in February. The March reading was below economists' expectations for a drop to 65.0.

Rising gasoline prices, boosted by unrest in the Middle East and North Africa, are eroding consumer confidence and raising inflation expectations. A separate survey last week showed morale among households at its lowest in more than a year.

The Conference Board found one-year price expectations rose to their highest since October 2008.

Economists said the jump in inflation expectations was unlikely to trouble the Federal Reserve, which has said price pressure from commodities should be temporary. Core inflation, which strips out food and energy costs, is not far from recent record lows.

In Germany, worries about the global economy and inflation drove down consumer sentiment for the first time in 10 months.

U.S. financial markets were little moved by the data.

LOSING SOME MOMENTUM?

The weaker U.S. confidence survey came on the heels of numbers on Monday that showed consumer spending, adjusted for inflation, rose only modestly in February, pointing to a slowdown in first-quarter economic growth.

"It suggests to me that consumer spending is already tracking at about half the rate of growth in the first quarter as it did in the fourth quarter," said Christopher Low, chief economist at FTN Financial in New York.

The apparent hiccup in growth comes as policymakers at the Fed ramp up a debate on whether the economy is strong enough for the central bank to scale back its massive stimulus program.