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NEW YORK (Reuters) � Consumer sentiment unexpectedly worsened in early September to its weakest level in more than a year, as distress over jobs and finances intensified among upper-income families, a survey released on Friday showed.

The Thomson Reuters/University of Michigan's preliminary September reading on the overall index on consumer sentiment came in at 66.6, down from 68.9 in August.

"Confidence edged downward in early September, as consumers judged prospects for the national economy less favorably," the survey's director Richard Curtin said in a statement.

The latest sentiment figure was the lowest since August 2009 and fell short of the median forecast of 70.0 among economists polled by Reuters.

The entire decline in the sentiment index was recorded among households with incomes above $75,000, while confidence among lower-income families improved, the survey showed.

Curtin said the divergence between the two income groups likely stemmed from worries over a protracted delay to an extension of federal tax cuts to families with incomes above $250,000.

The survey's barometer of current economic conditions was 78.4 in early September, flat versus 78.3 in August. It came in below a forecast of 79.0.

The survey's gauge of consumer expectations unexpectedly slipped to 59.1, the lowest since March 2009. This was below August's 62.9 and a predicted reading of 64.2.

The measure on consumers' 12-month economic outlook plummeted to 59 in early September, the lowest since April 2009. It was down 10 points from August.

As tax worries have eroded upper-income consumers' confidence in recent weeks, the survey showed overall job anxiety held steady at its elevated levels.

Consumers, given their economic anxiety, believed prices will fall over the next 12 months.

The survey's one-year inflation expectations measure fell to 2.2 percent from 2.7 percent August. This was the lowest reading since last September with nearly a third of consumers surveyed expecting deflation or a zero inflation rate during the year ahead.

But the survey's five-to-10-year inflation outlook index was unchanged from August at 2.8 percent.

(Reporting by Richard Leong, Editing by Chizu Nomiyama)

WASHINGTON (Reuters) � Consumer prices increased slightly more than expected in August as food prices rebounded and energy costs remained elevated, but core prices were flat, a government report showed on Friday.

The Labor Department said its seasonally adjusted Consumer Price Index rose 0.3 percent after rising 0.3 percent in July.

Analysts polled by Reuters had forecast consumer prices gaining 0.2 percent last month. In the 12 months to August, the CPI rose 1.1 percent after a 1.2 percent increase the prior month. The increase was in line with market expectations.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

LONDON (Reuters) Futures for the Dow Jones industrial average, the S&P 500 and the Nasdaq 100 rise 0.8 percent to 1 percent, pointing to a stronger start on Wall Street on Friday.

U.S. health care company Johnson & Johnson (JNJ.N) is in talks to pay 1.75 billion euros ($2.3 billion) for the shares in Dutch biotech Crucell (CRCL.AS) it does not already own to strengthen its vaccine business. Crucell shares jumped 55 percent.

At 1355 GMT (9:55 a.m. EDT), Thomson Reuters/University of Michigan Surveys of Consumers release preliminary September consumer sentiment index. Economists in a Reuters survey expect a reading of 70.0 compared with 68.9 in the final August report.

Shares of Oracle (ORCL.O) listed in Frankfurt were up 3.6 percent. The company posted a 25 percent surge in software sales that sharply beat forecasts and a pickup in its new hardware business, underscoring robust tech spending by corporations.

Labor Department releases the August Consumer Price Index (CPI) at 1230 GMT (8:30 a.m. EDT). Economists in a Reuters survey expect a 0.2 percent increase compared with a 0.3 percent rise in July.

Enbridge Inc (ENB.TO) will restart a major oil pipeline carrying up to a third of Canada's U.S.-bound crude shipments on Friday, eight days after it was shut to stop a leak.

Economic Cycle Research Institute (ECRI) releases at 1430 GMT (10:30 a.m. EDT) its weekly index of economic activity for September 10.

U.S.-listed shares of Research In Motion (RIMM.O) (RIM.TO) jumped 6.5 percent after the close on Thursday following its results.

Data on real earnings for August is due at 1230 GMT (8:30 a.m. EDT). Economists forecast a rise of 0.1 percent, versus a 0.2 percent increase in July.

Resource-related stocks in focus as crude oil prices rebounded and key base metals rose 1.1 to 1.8 percent.

U.S. Treasury Secretary Timothy Geithner vowed on Thursday to rally other world powers to push China for trade and currency reforms as he was grilled by lawmakers demanding a crackdown on Beijing's policies.

VMware Inc (VMW.N) is in advanced talks to buy Novell Inc's (NOVL.O) Linux operating system business, the Wall Street Journal reported, citing people familiar with the matter.

Japan's Nikkei average rose 1.2 percent to a six-week closing high while European shares rose, with miners gaining after copper prices gained following reassuring comments from China about its monetary policy. (.T) (.EU)

U.S. stocks were little changed on Thursday as mixed economic data and a cautious forecast from economic bellwether FedEx kept the market locked in its recent tight trading range.

The Dow Jones industrial average (.DJI) gained 22.10 points, or 0.2 percent, to 10,594.83. The Standard & Poor's 500 Index (.SPX) was virtually unchanged at 1,124.67. The Nasdaq Composite Index (.IXIC) gained 1.93 points, or 0.1 percent, to 2,303.25.

(Reporting by Atul Prakash; Editing by David Holmes)

AMSTERDAM (Reuters) � U.S. health care company Johnson & Johnson (JNJ.N), looking to catapult itself into the global vaccine market, is in talks to pay 1.75 billion euros ($2.3 billion) to buy Dutch biotech Crucell (CRCL.AS).

J&J, which already owns a 17.9 percent stake in vaccine maker Crucell, said on Friday its potential cash offer valued Crucell shares at 24.75 euros, a 58 percent premium to Thursday's closing price.

Crucell shares jumped 53.9 percent to 24.16 euros at 0951 GMT, lifting other Dutch biotech stocks and shares in Austrian vaccine maker Intercell (ICEL.VI), which climbed 6.7 percent.

"We believe the chances for success are high. The bid price on the remaining shares can be considered as a knock-out price and is substantially higher than the analysts' consensus target price," analyst Jan de Kerpel at KBC Securities said.

De Kerpel said the potential deal was more proof it was a question of "not if but rather when" other successful biotech companies with late-stage products will be bought.

Johnson & Johnson and Pfizer (PFE.N) have been flagged as possible, but unlikely, rival bidders for U.S. biotech company Genzyme (GENZ.O), the target of Sanofi-Aventis (SASY.PA), so the bid may signal J&J is out of that race.

A Britain-based analyst who did not wish to be named said it would be "pretty unlikely" that Johnson & Johnson would bid for both Genzyme and Crucell at the same time.

Crucell Chief Executive Ronald Brus said the potential deal with J&J, which does not have its own vaccine business, meant the world's sixth-largest vaccine producer can accelerate its development program.

"With the help of Johnson & Johnson we can increase our reach throughout the world significantly," Brus told reporters. "Together we feel we form a very strong team."

Brus said he intended to stay on and did not expect any lay-offs at Crucell, which produces vaccines against flu and childhood diseases and is developing products against yellow fever alongside research into tuberculosis and malaria vaccines.

RIVAL BIDDERS?

Drugmakers have been looking to biotech to refill product pipelines at a time when sales of old blockbusters are falling to generic competition. Vaccine makers have also become more attractive as their sales and traditionally low margins improve.

Johnson & Johnson is a diversified group that makes prescription drugs as well as Tylenol pain relievers, Listerine mouth wash and Band-Aid adhesive bandages. Company veteran William Weldon has been chief executive since 2002.

It bought its stake in Crucell, one of two major independent vaccine makers in Europe alongside Intercell, in September 2009 as part of a flu vaccine development deal.

Crucell is on the cusp of sharp sales growth for its pediatric vaccine Quinvaxem after a production failure at rival Shantha Biotechnics, which was bought by Sanofi-Aventis last year for 6.1 times its annual sales.

The J&J offer for Crucell is at 5.5 times estimated sales.

Shantha lost prequalification status to supply the World Health Organization (WHO) with its childhood vaccine in July.

Rabo Securities analyst Fabian Smeets said he believed the likelihood of a bidding war was small.

He said Britain's GlaxoSmithKline (GSK.L) and Sanofi-Aventis, who have their own vaccine operations, were unlikely to bid as Swiss firm Novartis (NOVN.VX) could then break a partnership in which it supplies components for Crucell's childhood vaccines.

But brokerage Jefferies International said Novartis and Pfizer might still be potential bidders. Takeover talks between Wyeth and Crucell broke down last year after Pfizer bid for Wyeth in a series of mega-mergers in the pharma industry.

J&J said on Friday its due diligence is largely complete, but any deal remained subject to negotiation of a definitive agreement and customary pre-offer conditions, including consultation with Crucell's works council and trade unions.

Brus said the deal could close by the end of the year and Crucell's supervisory and management boards would recommend shareholders tender their shares to the offer.

(Editing by Mike Nesbit and Michael Shields)

($1=0.7611 euros)

WASHINGTON (Reuters) � Wall Street critic Elizabeth Warren said on Friday she accepted the job of setting up a consumer financial protection agency for U.S. President Barack Obama and declared that the time for financial "tricks and traps" was over.

Obama was expected to announce his appointment of Warren, a Harvard University professor and hero to liberal activists, at 1:30 pm EDT, taking a step forward in enacting the financial reform that is a signature achievement of his presidency.

The Consumer Financial Protection Bureau, which is Warren's brainchild, will have broad powers to write and enforce regulations covering mortgages, credit cards and other financial products.

Warren is reviled by many on Wall Street for her calls to crack down on abusive lending practices by financial firms.

Warren will not be in charge of directing the agency once it is formally set up. By selecting her as an adviser rather than as the agency head, Obama sidestepped the congressional confirmation process, which Republicans could have used to thwart Warren's nomination.

Warren said in a blog post on the White House website that she had "enthusiastically agreed" to take on the role.

"The president and I are committed to the same vision on CFPB and I am confident that I will have the tools I need to get the job done," she said.

"The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market. The time for hiding tricks and traps in the fine print is over."

The White House hopes Warren's appointment will energize supporters from the president's liberal base ahead of November 2 elections across the nation that are expected to produce victories and possibly congressional majorities for Republicans.

She will become assistant to the president and special advisor to Treasury Secretary Timothy Geithner.

"Warren will play the lead role in setting up the bureau and ensuring it is as effective as possible," a White House official said. "(She) will also advise the president on policies and programs that are designed to protect the financial interests of middle-class families."

ENLARGING THE FINE PRINT

Obama, a Democrat, will use the announcement to draw attention to financial regulation reform -- legislation that Republicans largely opposed and voters largely ignored as they fret over a rough economy and near double-digit unemployment.

"Never again will folks be confused or misled by the pages of barely understandable fine print that you find in agreements for credit cards, mortgages, and student loans," Obama was to say, according to excerpts of his remarks released in advance.

"Basically, the Consumer Financial Protection Bureau will be a watchdog for the American consumer, charged with enforcing the toughest financial protections in history."

Obama has made improving the lives of the middle class a central theme of his efforts to support Democratic candidates and lawmakers ahead of the November elections, drawing contrasts with Republicans, who he says favor the rich when it comes to financial and tax policies.

Enacting the broad financial reform law -- including the establishment of the consumer agency -- is part of that strategy he hopes will resonate with Americans.

"If the CFPB can succeed at leveling the playing field, we can go a long way toward repairing a gaping hole in the budgets of millions of families," Warren said in the blog.

"But nobody has ever thought or argued that the consumer bureau can fix everything. Lost jobs, stagnant incomes, rising costs for college, dwindling retirement savings -- there's a lot of work to be done."

It is unclear how long Warren will stay in her job establishing the agency. Treasury, which is mandated to set it up, must lay out a timetable soon for how long that will take.

(Additional reporting by Caren Bohan and Ross Colvin; Editing by Bill Trott)