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One of the focal points of Berkshire Hathaway's (BRKa.N) annual meeting weekend is the Friday night cocktail party at Borsheims, the country's largest independent jewelry store and one of the many businesses in Buffett's ice-cream-to-insurance conglomerate.

The young and the old mingled freely among display cases laden with diamonds at 20 percent off, and many took advantage of the discounts. One thing that was not discounted, though, was the loyalty of Nebraskan shareholders to Buffett, beloved as the hometown kid with the folksy manner.

"I think he's been handling it very well ... I think he's done a nice job of addressing the issue but also recognizing that it's a difficult one," said Amy Peck of Omaha, a shareholder who was visiting with her dog Bosley in tow.

Peck was hardly alone; most smaller shareholders in Omaha simply feel differently about the controversy surrounding David Sokol's behavior than some institutional holders do.

Even if they expect answers from Buffett about Sokol this weekend, they still fundamentally believe in the man some call the "Oracle of Omaha." One investor choked up when asked about Berkshire after Buffett is no longer in charge.

"In my opinion Warren Buffett is Superman," said Ernie Fierro of Omaha, who has been attending the annual meeting for the last five years.

This aura of invincibility is what keeps investors coming back year after year. In fact, Buffett has said he'll never retire, and suggested he'll work until he dies.

Others made no effort to hide their adulation for the 80-year-old and their eagerness to buy Berkshire's stock -- even four-legged investors.

"You know what, that's not a bad idea, maybe we'll have him buy some shares too," Peck said of her dog.

Not everyone shopping at Borsheims on Friday was a small investor, though. Baba Blumkin of Los Angeles, a descendant of the family that founded Buffett's retailer Nebraska Furniture Mart, was browsing some of the store's higher-end offerings.

Blumkin, who grew up attending Berkshire's annual meetings, agreed Buffett had handled the situation well. Yet, asked what he would ask Buffett if given the opportunity, Blumkin had a slight less pragmatic question than most.

"Is it fun hanging out with LeBron James?" he said.

(Reporting by Ben Berkowitz, editing by Bernard Orr)

The European Commission, the EU's executive body, said it is probing whether major investment banks, including Goldman Sachs and JP Morgan, colluded in their operations in a market that is already under scrutiny by U.S. authorities and being subjected to broad, new regulations.

Credit default swaps, or CDS, are derivatives that let a buyer transfer loan default risk to a seller, making them a kind of insurance against default. CDS can also be bought by speculators without direct interest in the debts involved.

CDS played a central role in the near collapse of AIG in 2008, which led to a massive U.S. taxpayer bailout of the former insurance giant. The contracts have also been at the heart of the debt crisis engulfing some weaker EU states.

The EU probe comes as the 27-nation bloc struggles, along with the United States, to complete a government crackdown under way for months now on the broad, $600 trillion off-exchange derivatives markets, including CDS.

"CDS play a useful role for financial markets and for the economy," said the EU's anti-trust commissioner, Joaquin Almunia, in a statement announcing the two-track inquiry.

"Recent developments have shown, however, that the trading of this asset class suffers a number of inefficiencies that cannot be solved through regulation alone," he said.

Almunia added that a lack of transparency could lead to abusive behavior and that he hoped the probe would improve financial markets and aid economic recovery.

The U.S. Justice Department in 2009 launched an inquiry into anti-competitive practices in the trading, clearing and pricing of CDS in the United States. A spokeswoman for the U.S. Justice Department declined to comment on the EU move.

Unlike other derivatives, such as grain or metal futures, credit derivatives are risk transfers. "It's a banking function that's been converted by this small group of banks into a trading instrument," said Karen Shaw-Petrou, managing director at consulting firm Federal Financial Analytics.

"The problem is no one knows what anything is worth unless or until the entity against which the CDS is placed defaults ... That's what makes it very opaque," she said.

GREEK CRISIS

In Europe, CDS moved to center stage last year as Greece grappled with higher borrowing costs, blaming the move on speculators raising default insurance costs.

The European Commission, which regulates competition in the EU, said it would investigate whether 16 investment banks had colluded or abused a dominant market position.

The opaque CDS market, where industry players say the only record of some multimillion-euro deals is just a fax, has frustrated politicians who have struggled to understand it because there are few central records of trading.

"It is not a transparent market," said Shaw-Petrou. "It's a liquid market ... but there's no real proof of value other than moment-to-moment exchanges that are then impossible to verify because it's not a public exchange."

The probe could hit banks' bottom lines as the EU can fine companies up to 10 percent of revenues and has handed out penalties as big as 1 billion euros ($1.5 billion).

Analysts said CDS trading was too concentrated. "Eighty percent of derivatives transactions on both sides of the Atlantic are done by about eight banks," said Karel Lannoo of the Center for European Policy Studies, a think tank.

EU countries and the region's parliament are trying to agree how to revamp derivatives market rules, with some lawmakers calling for outright bans on speculative CDS trading. Such calls were heard two years ago in the United States, but major CDS dealers were able to silence them.

Instead, the 2010 Dodd-Frank reforms of financial regulation mandated the first comprehensive U.S. regulation of off-exchange derivatives, including CDS. The legislation is now being implemented by regulatory agencies.

The reforms mandate standardization and increased trading on exchanges or electronic platforms of derivatives. For instruments ill-suited to this, more use of central clearinghouses and disclosure of transactions is required.

A comparable level of detail has yet to emerge from EU debates about derivatives oversight, leading to some concern among regulators that momentum behind global reforms could slow amid divergent regional regulatory approaches and stiff resistance from banks defending their business models.

MARKIT EYED

The European Commission said it will also investigate any collusion by Markit, which provides prices and whose shareholders are the 16 banks. Markit denied any inappropriate conduct.

"Markit has no exclusive arrangements with any data provider and makes its data and related products widely available to global market participants," it said in a statement.

The EU said it would investigate nine of the 16 banks and ICE Clear Europe, a CDS clearinghouse owned by exchange operator InterContinental Exchange, to see if preferential tariffs given to the banks hurt competitors.

The 16 banks being examined are: JP Morgan, Bank of America Merrill Lynch, Barclays, BNP Paribas, Citigroup, Commerzbank, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Morgan Stanley, Royal Bank of Scotland, UBS, Wells Fargo Bank/Wachovia, Credit Agricole and Societe Generale.

The banks named either declined to comment or were not immediately available.

(Additional reporting by Arno Schuetze in Frankfurt, Emma Thomasson in Zurich, Kevin Drawbaugh, Sarah Lynch and Diane Bartz in Washington and William James in London; editing by Rex Merrifield and Alexander Smith, Gary Hill)

The world's biggest maker of earth-moving equipment said on Friday it now looks for full-year earnings of $6.25 to $6.75 per share, up from its prior forecast of "near $6" and above analysts' expectations.

It also reported first-quarter profit of $1.84 per share, well above the $1.31 Wall Street expected.

(For a related graphic click: r.reuters.com/bak39r)

"It's a huge number on huge volume, that's the simplest way of describing it," said Eli Lustgarten, an analyst at Longbow Research. He noted that revenue came in more than $1 billion above forecasts.

The report comes a day after government figures showed that economic growth in the United States slowed sharply in the first quarter, with higher food and gasoline prices starting to weigh on consumer spending and sparking concern about inflation.

Commodity inflation is not necessarily bad news for companies including Caterpillar and General Electric Co that make equipment used in energy production and commodity extraction. Rising demand for and prices of metals, coal and oil are driving demand for Caterpillar's heavy equipment -- its sales to miners and other resource companies nearly doubled in the quarter, outpacing its construction equipment business.

"We expect that the pace of world economic growth will support continued recovery in the key industries we serve," said Doug Oberhelman, who took the reins as chief executive of the Peoria, Illinois-based company last June.

Caterpillar joins a string of strong earnings reports from industrials ranging from 3M Co to Komatsu Ltd.

Its shares rose 2.8 percent to $115.85 in premarket trading, above their lifetime high on the New York Stock Exchange. As of Thursday's close, they were up 63 percent over the past year, more than four times the pace of the rise in the Dow Jones industrial average, of which Caterpillar is a component.

QUAKE EFFECT

The company reported first-quarter profit of $1.23 billion, compared with $233 million, or 36 cents per share, a year earlier.

Revenue rose 57.2 percent to $12.95 billion, above expectations of $11.69 billion, according to Thomson Reuters I/B/E/S.

Earlier this week Komatsu reported operating profit had doubled, citing demand in China and a recovery in the United States and Europe. The Japanese company said it was unclear what effect Japan's March 11 earthquake, tsunami and nuclear crisis would have on its results this year.

Caterpillar said the aftermath of the Japan quake, which has shaken supply chains around the world, would weigh on its full-year results, pulling down revenue by about $300 million and operating profit by $100 million.

The company is expected to close its $7.6 billion acquisition of mining equipment maker Bucyrus International later this year. Caterpillar officials in March said they might complete the purchase without issuing new shares because of its expected strong profit growth this year.

The company noted that it added 20,813 workers over the past year, about a third of whom work in the United States. That represented a 19.3 percent increase in headcount.

(Reporting by Scott Malone; editing by Robert MacMillan, John Wallace, Dave Zimmerman)

Futures for the S&P 500, the Dow Jones and the Nasdaq were flat to down 0.1 percent by 0825 GMT.

Shares on Wall Street rose on Thursday, with the Dow Jones Transportation Average .DJT closing at an all-time high.

Corporate results on tap include quarterly earnings from Caterpillar (CAT.N), the world's largest maker of heavy equipment, which is expected to show a more-than-tripling of profit from a year ago. Analysts predict earnings per share (EPS) of $1.31 against 36 cents a year ago.

Chevron is also scheduled to report earnings, with analysts expecting the second-largest U.S. oil company to show EPS of $3, against $2.36 a year ago.

Major macroeconomic data due later in the session is likely to provide further direction for equities, with the New York ISM figures for April due at 1230 GMT, the Chicago PMI numbers at 1345 GMT and the University of Michigan consumer sentiment for April scheduled for release at 1355 GMT.

In company news, Nasdaq OMX and IntercontinentalExchange are poised to go hostile in their bid for NYSE Euronext after shareholders ratcheted up pressure on the Big Board parent to get a better deal.

Samsung Electronics (005930.KS) filed its own U.S. lawsuit against Apple (AAPL.O), accusing the iPad maker of infringing 10 patents in an escalation of the dispute over tablet and mobile technology.

French energy company Total SA (TOTF.PA) offered to pay up to $1.37 billion for a majority stake in U.S. solar company SunPower Corp (SPWRA.O), one of the biggest moves ever by an oil and gas giant into the market for renewable energy.

After the closing bell, shares of both Research in Motion Shares (RIMM.O) and Microsoft (MSFT.O) after posting quarterly earnings

In Europe, the FTSEurofirst 300 .FTEU3 index of top shares ticked lower in early trade to snap a six-session rally. Volumes, however, were thin as Britain's markets were closed for a royal wedding holiday.

(Reporting by Harpreet Bhal; Editing by Mike Nesbit)

A fresh batch of U.S. economic data in the form of rising claims for jobless benefits failed to rescue the dollar, which had dropped to its weakest level since July 2008 against other currencies before recovering slightly.

Silver barely moved, standing at 48.32 an ounce by 0234 GMT (10:34 p.m. ET on Thursday), having rallied to a record at $49.51 an ounce on Thursday. Gold lost $1.10 to $1,533.85 an ounce after hitting a lifetime high around $1,538 an ounce in the previous session.

"If the dollar continues to weaken, then it's only likely to boost gold as well as silver as the inverse relationship between the two assets persists. I would say that for gold I am still looking for it to hit $1,600 this year," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.

"In the long term, I think if we see silver prices at such a high level, then it could hurt the industrial demand."

But dealers said strong investment demand for silver would keep the metal at record levels, while a lack of scrap sales in the physical market suggested that investors expected more gains. Year to date, silver was up almost 60 percent, sharply above gold's 8 percent gain.

A bullish target at $1,549 per ounce is still intact for spot gold, based on its wave pattern and a Fibonacci projection analysis, according to Wan Tao, who is a Reuters market analyst for commodities and energy technicals.

"There's some selling but I would say it's very light," said a dealer in Singapore, who trades gold and silver. "It had been a very busy week, and I am glad today is Friday. It's all quiet, finally."

The CME Group Inc, parent of the Chicago Board of Trade, said on Thursday it would raise maintenance margins for COMEX 5000 Silver futures by 13.2 percent, making it more expensive for silver speculators to trade in.

Soaring prices hurt the bottom line of certain manufacturers, including photography company Eastman Kodak, which said on Thursday a hike in raw material costs, particularly silver, led to a decrease in its film business revenue.

Trading was subdued in Asia, with Japanese financial markets shut for a public holiday. UK markets will be closed for the royal wedding. Premiums for gold bars were steady in Hong Kong and Singapore.

The dollar index, which tracks the currency's performance against a basket of major currencies, stood at 73.065 on Friday, having plumbed a three-year low of 72.871 on Thursday.

Sentiment for the dollar took a hit this week after the Federal Reserve said it was in no hurry to tighten its ultra-loose monetary policy, a move that gave investors the green light to keep using the dollar as a funding currency to buy higher-yielding assets.

"It all depends on the U.S. dollar, but I would say we only see a small amount of selling in the physical market," said a dealer in Hong Kong.

In the energy market, U.S. crude futures were steady in early trade on Friday, after rising to a 31-month high settlement in the previous session, as a weak dollar helped stem a slide in prices from slower economic growth in the United States in the first quarter.

(Reporting by Lewa Pardomuan; Editing by Clarence Fernandez)