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According to PIMCO's website on Thursday, Gross' $234 billion Total Return Fund (PTTRX.O) held 10 percent in non-U.S. developed bonds as of the end of May 31, up from just 6 percent as of the end of April.

Gross, who also helps oversee over $1.2 trillion in assets as co-chief investment officer at Pacific Investment Management Co., gingerly stepped up his exposure in Treasuries in May, holding 5 percent compared with 4 percent in April.

But Gross continues to be bearish on the United States.

As of May 31, Gross' Total Return fund held a negative 9 percent short position in a new investment category referred to as "liquid rates," which will include U.S. dollar-denominated interest-rate swaps, swaptions, options, and other derivatives. That position was unchanged from April.

The latest data makes it appear as if the fund's total short position is 9 percent -- up from the previously reported short position of 4 percent, but that could not be confirmed with PIMCO and cannot be determined by looking at the data provided.

PIMCO's money market and cash equivalents exposure dropped slightly to 35 percent as of May 31 from 37 percent as of the end of April. Gross also decreased his position in mortgages in May to 21 percent from 24 percent.

PIMCO's representatives declined further comment.

Gross' move to ratchet up his bearishness in March by taking his initial short position in U.S. government-related debt has been the subject of market criticism, given the furious rally in U.S. Treasuries.

The debt was categorized as Treasuries, TIPS, agencies, interest-rate swaps, Treasury futures and options and FDIC-guaranteed corporate securities. But the Total Return fund, as illustrated, has not been short in those U.S. government securities.

Last week, a source familiar with the matter told Reuters that Gross is not short Treasuries, but swaps. Swaps are an agreement between two parties to receive a fixed rate of interest and pay a floating rate (three-month LIBOR).

When an investor "shorts" a swap, he agrees to pay a fixed rate in exchange for a floating rate, which is just the reverse. To put it simply, he is selling a bond betting that yields will rise.

Gross told Reuters in early May that the only way he would purchase Treasuries in a big way again is if the United States heads into another recession.

Last week, the yield on the benchmark 10-year Treasury note fell below 3 percent, the first time since December, on further evidence the economic recovery is losing momentum -- and fast.

The 10-year's yield closed at 2.99 percent on Thursday.

He said: "Treasury yields are currently yielding substantially less than historical averages when compared with inflation. Perhaps the only justification for a further rally would be weak economic growth or a future recession that substantially lowered inflation and inflationary expectations."

Gross' fund is up 3.38 percent so far this year, outperforming 52 percent of his peers, according to Lipper as of May 31 data. Year to date through June 8, his fund is up 3.37 percent, outperforming 42 percent of his peers, Lipper added.

(Reporting by Jennifer Ablan; Editing by Kenneth Barry)

ECB President Jean-Claude Trichet signaled the hard line at the bank's monthly news conference, as new figures from Athens showed the Greek economy shrank by 5.5 percent in the first quarter of the year, a far sharper rate than expected.

The data cast fresh doubt on Greece's ability to meet targets for cutting its budget deficit, part of a 110 billion euro bailout agreed with the European Union and the International Monetary Fund in May last year.

The EU is now considering another aid package for Athens, and euro zone sources told Reuters on Thursday the new deal would total about 120 billion euros, with the EU and IMF providing up to half of that sum and the rest coming from Greek privatization revenues and private creditors.

How to involve the private sector is hotly contested within the single currency bloc.

German Finance Minister Wolfgang Schaeuble wrote to Trichet, the IMF and his euro zone partners earlier this week and proposed a swap in which private debt holders would trade in their Greek government bonds for new ones, giving Greece an extra seven years to work through its debt.

But ratings agencies said on Thursday that it might be impossible to conduct such a swap on a voluntary basis, while Moody's Investors Service warned a Greek default could impact the ratings of Ireland and Portugal, the two other euro zone countries that have required bailouts.

The ECB, the European Commission and countries including France have warned against any Greek debt restructuring that involves coercion of investors, for fear that it could alarm markets and spread contagion to bigger members of the euro zone such as Spain.

"We exclude all concepts which would not be purely voluntary, without any elements of compulsion," Trichet said. "We call for avoiding any credit event and selective default. And of course, default."

French official sources told Reuters they could support a private sector rollover of Greek debt but only if a voluntary formula could be found that would prevent wider damage to euro zone markets.

UNDER PRESSURE

Greek, Irish and Portuguese bonds all came under pressure after the Moody's warning, and the cost of insuring Greek sovereign debt against default rose.

Although Germany may struggle to win support for its debt swap proposal, the fact that euro zone officials are including a 30 billion euro contribution from the private sector in their assumptions about a new Greek bailout suggests some form of investor involvement is likely.

Several banks, including French heavyweight Credit Agricole, have expressed willingness to participate in recent days. Many of the German banks that hold Greek sovereign debt on their books are part-owned by the government, meaning Berlin would have significant influence over their stance.

German Chancellor Angela Merkel and Schaeuble briefed lawmakers on their Greek aid plans on Wednesday evening and received strong backing for the debt swap idea.

They are worried about a backlash from angry taxpayers and a possible rebellion in parliament if the banks that lent Greece money in better times remain untouched, as they did under the Greek, Irish and Portuguese bailouts sealed over the past year.

A group of German academics filed a legal challenge to the rescues a year ago, and Germany's top court is to hold a hearing on their suit on July 5.

Germany's drive to involve private creditors is supported by several of its euro zone partners, including the Netherlands and Finland.

But a euro zone source said the ECB had come out strongly against Schaeuble's proposal during a Wednesday conference call involving euro zone finance ministers and the central bank.

The central bank has warned that it would refuse to accept Greek debt as collateral in the event of a restructuring, a step that could further destabilize the Greek banking system.

CALL THE BLUFF

The source said, however, that it would ultimately be up to governments to decide how to proceed, and that it was possible other euro zone states could end up going along with the German plan, essentially calling the ECB's bluff.

"It could solve the problem if it was highly successful with a clear majority of the bond holders participating," the source said. "So this is very ambitious but also very risky."

Greece's debt burden stands close to 340 billion euros, or roughly 150 percent of its gross domestic product -- a level that many economists believe makes a substantial restructuring, involving so-called "haircuts" or forced bond losses, inevitable at some stage.

The softer options being considered by Europe would not reduce Greece's debt burden but would buy it more time to get its economy back in gear and restore confidence in its fiscal situation through privatizations.

EU leaders aim to agree on the new aid package for Greece at a June 23-24 summit in Brussels.

(Writing by Noah Barkin, editing by Andrew Torchia)

Wall Street fell for a sixth day on Wednesday after the Federal Reserve's Beige Book offered fresh evidence of an economic slowdown. It reinforced Fed chief Ben Bernanke's bearish assessment on growth on Tuesday.

The market's mood soured when Bernanke gave no hint that the central bank would offer a third round of stimulus to an economy losing steam.

"The global economy is not tumbling, it's just going through a turbulence zone. We think that things will get better in the second half of the year," said Vincent Treulet, head of investment strategy at BNP Paribas Investment Partners, which has 551 billion euros ($808 billion) in assets under management.

"The next earnings season will be key. It could be the positive catalyst the market needs." The MSCI world equity index .MIWD00000PUS was steady, having hit its lowest since March on Wednesday. The index has fallen 6.7 percent since hitting a three-year high in May.

The FTSEurofirst 300 index .FTEU3 rose 0.4 percent as recent losses attracted investors looking for a bargain.

Emerging stocks .MSCIEF lost 0.3 percent. Shanghai stocks .SSEC fell 1.7 percent to a 4-1/2 month low as concerns rose about further monetary policy tightening.

The euro rose 0.4 percent to $1.4640 ahead of the ECB meeting and President Jean-Claude Trichet's news conference.

The ECB is expected to use higher staff inflation forecasts to be published on Thursday to justify a case for a tightening in July, a move that would further raise the single currency's yield premium.

The euro has also remained unscathed by the euro zone's sovereign debt crisis. In a report obtained by Reuters on Wednesday, the EU, ECB and IMF mission to Greece said the next disbursement of Greek aid could not take place until it corrected the under-financing in its adjustment program.

Policymakers appeared to be edging closer to a compromise on how to structure a second aid package to Greece, but markets remained skeptical over the immediate impact of any solution involving private sector bondholders.

The dollar .DXY fell 0.3 percent against a basket of major currencies.

Bund futures fell 10 ticks to 124.77.

U.S. crude oil rose 0.8 percent to $101.58 a barrel while Brent crude gained 0.4 percent to $118.32 after Saudi Arabia failed to convince OPEC members to raise output targets and data showed U.S. crude stocks fell sharply last week.

(Additional reporting by Blaise Robinson; Editing by John Stonestreet)

Citi said the names of customers, account numbers and contact information, including email addresses, were viewed in the breach, which the Financial Times said was discovered by the bank in early May.

However, Citi said other information such as birth dates, social security numbers, card expiration dates and card security codes (CVV) were not compromised.

"We are contacting customers whose information was impacted. Citi has implemented enhanced procedures to prevent a recurrence of this type of event," Sean Kevelighan, a U.S.-based spokesman, said by email.

"For the security of these customers, we are not disclosing further details."

In the brief email statement, Citi did not say how the breach had occurred.

Another Citi spokesman, James Griffiths in Hong Kong, said the breach had affected 1 percent of North American card customers, which the bank's annual report says total 21 million.

But like Japanese electronics and entertainment group Sony, which has declared several security breaches of its networks this year, Citi could come under fire for not telling customers sooner.

"It may be the bank's business, but it's the consumer's personal information so consumers deserve to be told about security breaches immediately," said Dan Simpson, a spokesman for Australia's Consumer Action Law Center, an advocacy group.

"It's hard to see any reason why this sort of breach couldn't have been disclosed much sooner."

GROWING CONCERN

Citigroup joins a growing list of companies that have suffered cyber attacks.

Data storage firm EMC Ltd this week offered to replace millions of electronic keys after hackers used data from its RSA security division to break into the network of arms supplier and information technology provider Lockheed Martin.

Sony has reported several attacks, including one in which hackers accessed the personal information on 77 million PlayStation Network and Qriocity accounts.

Sony was criticized for a delay in telling account holders that their information had been stolen by hackers.

Google Inc last week revealed a major attack on its Gmail accounts targeting, among others, senior U.S. government officials that it said appeared to originate in China.

Washington has scrambled to assess if security had been compromised by the raid on Google's Gmail system, reflecting increasing concerns among global policymakers about cyber security.

Citi said it had discovered the unauthorized access at Citi Account Online, an online banking service, through routine monitoring.

"It's definitely a serious security breach when that amount of data's been stolen from a bank," said Sydney-based Ty Miller, chief technology officer of Pure Hacking, a network security company.

Citigroup global enterprise payments head Paul Galant, who previously ran the bank's credit card unit, said in April that security breaches are a fact of life for financial institutions.

"Security breaches happen, they're going to continue to happen ... the mission of the banking industry is to keep the customer base safe and customers feeling secure about their financial transactions and payments," he told Reuters in an interview.

(Additional reporting by Abhishek Takle and Renju Jose in Bangalore and Sonali Paul in Melbourne; Editing by Vinu Pilakkott and Neil Fullick)