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The remarks from St. Louis Federal Reserve Bank President James Bullard, Dallas Fed chief Richard Fisher, Fed Governor Kevin Warsh and Thomas Hoenig of the Kansas City Fed underscored tensions within the central bank over the wisdom of the decision to buy a further $600 billion in government debt.

"While this policy carries both risks and rewards ... the benefits outweigh the risks," Bullard told a group of securities analysts in New York.

He said worries the policy could create high inflation down the road were "legitimate and important," but added that the disinflationary trend "is worrisome right now."

The central bank's decision has sparked an unusually vocal public debate among Fed officials, while drawing the ire of many other nations, which worry the United States is deliberately undercutting the dollar.

Warsh, who like Bullard backed the new Fed program in a vote last week, expressed concern about the decision. He said he would have preferred the adoption of "pro-growth fiscal, regulatory and trade policies" to spur growth.

Fisher said the program would only work if lawmakers addressed the fiscal and regulatory uncertainties that he said were holding back businesses from expanding.

"I would suggest that even if you share my cautious perspective on this matter, you might be assuaged by looking at this new initiative as a bridge loan to fiscal sanity," he told a meeting of financial professionals in San Antonio.

Warsh emphasized that the policy would be subject to regular review and adjusted if needed, and he raised the prospect that rising inflation risks could lead the central bank to curb the program even with unemployment still painfully high.

"If the recent weakness in the dollar, run-up in commodity prices and other forward-looking indicators are sustained and passed along into final prices, the Fed's price stability objective might no longer be a compelling policy rationale," he said.

"Policies should be altered if certain objectives are satisfied, purported benefits disappoint, or potential risks threaten to materialize," Warsh said.

However, Bullard said his best guess was that the full amount would be purchased by mid-2011, as announced. "Given the outlook now ... it looks like we will follow through on that and reassess at that point," he said in an interview with Market News International published on Monday.

CRITICS ABOUND

Many economists think the Fed could eventually decide to push beyond the $600 billion in purchases announced last week, notwithstanding differing views within the central bank.

Bullard said the U.S. recovery had slowed, putting it in a disinflationary trend that needed to be addressed to avoid a debilitating bout of deflation. He said the unconventional bond-buying program should prove as effective as traditional policy.

Two years after a severe credit crisis rocked the world financial order and unleashed a wave of reforms, the Securities Industry and Financial Markets Association opened its annual conference vowing to push for rules "that actually work."

"SIFMA will continue to work with the (Obama) administration, regulators and Congress to continue to restore faith and confidence in our financial markets, including effectively implementing the Dodd-Frank Act," said association President Tim Ryan at the opening of the conference.

SIFMA represents hundreds of securities firms, banks and asset managers, including Goldman Sachs and Bank of America.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in July by President Barack Obama, touched every corner of the U.S. financial system and left many details to be worked out in months ahead by regulatory agencies.

Congress laid down some parameters for regulators on defining "proprietary trading," but left room for banks to retain some in-house trading operations in an area where drawing clear lines may be difficult.

Republicans who won control of the U.S. House of Representatives in last week's elections have vowed to try to roll back parts of Dodd-Frank, but face an uphill climb against continued Democratic Senate dominance and Obama's veto pen.

The Federal Reserve, the Treasury Department and other agencies are racing to complete hundreds of rules and studies mandated under Dodd-Frank, with lobbyists for banks and brokerages pushing to soften some provisions.

PROPRIETARY TRADING

Among these is the three-part Volcker rule, which curbs banks ability to trade for their own accounts unrelated to customer needs, known as proprietary trading; limits the involvement of banks with hedge funds and private equity firms; and sets a new cap on the domestic expansion capacity of the largest banks.

"The important aspect of this set of rulemaking will be how regulators define what activities are deemed 'proprietary' and thus prohibited, while ensuring that markets remain liquid and deep," Ryan said in his opening remarks.

"Our focus here is to help Treasury determine what qualifies as proprietary trading, and thus subject to the ban, and what is outside of the prohibition," Ryan said.

He also listed as a SIFMA priority influencing Dodd-Frank's ambitious mandates to impose the first federal regulation in history on the over-the-counter derivatives market, and to tag some big financial firms as "systemically significant."

Under the legislation, "systemically significant" financial giants would be put under tighter Fed oversight, while an "orderly liquidation" process for dismantling non-bank firms in distress would be led by the Federal Deposit Insurance Corp.

Both these aspects of the bill seek to combat the notion that some firms are "too big to fail" and to reduce the need for further taxpayer bailouts like those engineered in 2008 by the Bush administration at the height of the crisis.

Chrysler, the U.S. automaker managed by Fiat SpA (FIA.MI), reported a net loss of $84 million, compared with a net loss of $172 million in the second quarter of 2010.

Excluding the cost of $308 million in interest on loans and other expenses, the company posted an operating profit of $239 million. Third-quarter revenue was about $11.02 billion.

"A year ago, Chrysler Group laid out clear and concise five-year financial goals and after three consecutive quarters of better-than-forecasted results, we are not only living up to our commitments, but we are also exceeding our 2010 financial objectives," Chrysler CEO Sergio Marchionne said in a statement.

The automaker's results come a year after it unveiled an ambitious five-year turnaround plan during a marathon eight-hour session at its Auburn Hills, Michigan headquarters.

Chrysler now projects an operating profit of $700 million for 2010, up from its previous outlook of break-even to as much as $200 million. It sees free cash flow of $500 million, up from its previous forecast of a shortfall of $1 billion.

The automaker forecast 2010 revenue of $42 billion for the year, at the midpoint of its earlier range of $40 billion to $45 billion.

Earnings before interest, taxes, depreciation and amortization for the year is expected to be $3.3 billion, up from its earlier outlook of $2.5 billion to $2.7 billion.

Chrysler is launching 16 new and refreshed vehicles, including the 2011 Jeep Grand Cherokee and the Fiat 500, in a bid to seize market share in the United States.

The company has said it hopes to go public by the second half of 2011. Its larger rival, General Motors Co GM.UL, is slated to go public later this month.

(Reporting by Deepa Seetharaman, editing by Maureen Bavdek)

Tech and media companies will be in the spotlight after the Wall Street Journal reported on Sunday, citing unnamed sources, that AOL Inc (AOL.N) is exploring strategic options, which include a possible tie-up with Yahoo Inc (YHOO.O), and has retained financial advisers to do so.

Energy shares will also be in focus after oil company Royal Dutch Shell Plc (RDSa.L) unveiled plans on Monday to sell about a third of its stake in Woodside Petroleum (WPL.AX) for $3.3 billion, effectively putting Australia's largest oil and gas firm in play.

German sporting goods company Adidas (ADSGn.DE) hopes to grow sales to 17 billion euros ($23.9 billion) by 2015 as it strives to overtake market leader Nike (NKE.N).

Japan's Nikkei average rose 1.1 percent to a three-month closing high on Monday, adding to gains made last week as risk money shifts toward global equities on improving prospects for the U.S. economy, but European stocks were slightly down in early trade, with telecom shares such as Vodafone (VOD.L) among the biggest drags.

The dollar rose on Monday as an unwinding of dollar short positions that began with solid U.S. jobs data gathered pace, while renewed concern over euro zone peripheral debt hurt the euro.

Companies scheduled to report quarterly results on Monday include Frontier Communications Corp (FT.N), Priceline.com (PCLN.O), Progressive Corp (PGR.N) and Sysco Corp (SYY.N), while economic indicators on tap for Monday include the October employment trend number.

U.S. stocks rose for the fifth straight week as investors took heart from Republican gains in the elections and on news that more cheap money from the Federal Reserve was on the way.

The Dow Jones industrial average .DJI edged up 9.24 points, or 0.08 percent on Friday, to 11,444.08. The Standard & Poor's 500 Index .SPX added 4.78 points, or 0.39 percent, to 1,225.84. The Nasdaq Composite Index .IXIC rose 1.64 points, or 0.06 percent, to 2,578.98.

(Reporting by Blaise Robinson; Editing by Hans Peters)

The G20 summit has been pitched as a chance for leaders of the countries that account for 85 percent of world output to prevent "currency wars" from spreading to become a rush to protectionism that could imperil the global recovery.

It has been overshadowed by disagreements over the U.S. Federal Reserve's quantitative easing (QE) policy under which it will print money to buy $600 billion of government bonds, a move that could depress the dollar and cause a potentially destabilizing flow of money into emerging economies.

"I will say that the Fed's mandate, my mandate, is to grow our economy. And that's not just good for the United States, that's good for the world as a whole," Obama said.

"And the worst thing that could happen to the world economy, not just ours, is if we end up being stuck with no growth or very limited growth," he said.

The U.S. has frequently criticized China, saying it deliberately undervalues its currency to boost exports.

Despite U.S. officials repeating the mantra that they believe in a "strong dollar," China says Washington is engaged in the same thing that it stands accused of.

"As a major reserve currency issuer, for the United States to launch a second round of quantitative easing at this time, we feel that it did not recognize its responsibility to stabilize global markets and did not think about the impact of excessive liquidity on emerging markets," Chinese Vice Finance Minister Zhu Guangyao said at a briefing in Beijing on Monday.

The U.S. quantitative easing policy was unveiled last week to jeers from emerging market powerhouses from Latin America to Asia. Russia renewed its assault on the program on Monday.

"Russia's president will insist .... that such actions are taken with preliminary consultations with other members of global economy," said Arkady Dvorkovich, a Russian official who is preparing the country's position in Seoul.

The U.S. measures have triggered concerns over inflation and gold, a traditional hedge against rising prices, briefly powered to a record high above $1,398 an ounce.

U.S. UNDER PRESSURE IN BIPOLAR WORLD

India is Obama's first stop in a 10-day trip to Asia that will include Indonesia and Japan.

He will arrive in Seoul for the November 11-12 summit weakened by a crushing congressional election defeat for his Democratic Party and under fire from all sides. Germany described U.S. economic policy as "clueless" last week.

The U.S. has already backed down on one proposal for the G20, a measure that would cap current account balances at 4 percent of gross domestic product, something economists said was clearly aimed at China.