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Experts throughout the aviation industry have been predicting a delay since the November 9 electrical fire that led to an emergency landing in Laredo, Texas and a stop to 787 test flights. Time-frame estimates for a new delay range from a month to a few years.

Boeing's new carbon-composite plane, already six times delayed and almost three years late, is supposed to be delivered to the first customer in the first quarter of next year.

The world's second-largest plane-maker after Airbus (EAD.PA) said on Wednesday it is making minor design changes to power distribution panels on the 787 and updating software that manages power as it plots its way to getting the plane flying again.

It said the fault which led to the fire was most likely caused by foreign debris.

A revised 787 program schedule "is expected to be finalized in the next few weeks," the company added.

The 787, a light-weight, fuel-efficient airplane, has generated about 850 orders but has also been dogged by engineering, labor and supply chain problems.

According to its latest schedule, the company had planned to deliver a Dreamliner to its first customer, Japan's All Nippon Airways (9202.T), in the first quarter of 2011. The original target date was May 2008.

(Reporting by Kyle Peterson and Bill Rigby; editing by Gunna Dickson)

A rare bit of good news on the U.S. labor market overnight was not met with investors' applause in the Asian session, with other factors such as the fast closing window on financing in the region and fears of the next fiscal domino to fall in Europe keeping investors focused on preserving capital.

With equity markets off to a cautious start, the Australian dollar -- which has become an indicator for risk taking in the region -- slipped below US$0.98.

Japan's Nikkei share average was up 0.5 percent .N225, extending what has been a surprising outperformance of the rest of the region this month.

The Nikkei has risen 9.5 percent so far in November, and with three more trading days to go in the month is on track for the best performing month since March.

The MSCI index of Asia Pacific stocks outside Japan .MIAPJ0000PUS is down 1.3 percent in November, perhaps collateral damage from the need of investors to hide out in deeper markets until the new year.

The index was largely steady on the day, with consumer-related sectors seeing a bias to sell.

"With growth above potential in many emerging markets, particularly in Asia, the risk of broad-based inflation is real and growing," Goldman Sachs analysts said in a note.

"And, as policy responds to this in the form of rate hikes or nominal currency appreciation, equities -- stuck between the pull of growth and the push of tightening policy -- are likely to have a bumpier ride.."

In capital markets, bankers found even Asia's financing stronghold of Hong Kong was having difficulty pushing deals through given thinning market conditions and increased risks. More than $3 billion worth of proposed IPOs in Hong Kong were deferred, while Hong Kong Electric Holdings (0006.HK) delayed the pricing of its high-grade 10-year dollar bond to next week.

The Thanksgiving holiday in the United States will also keep trading activity limited on Thursday.

The need for liquidity has not necessarily benefited U.S. Treasuries, though higher yields have been a draw to the dollar.

After poor auctions of mid-maturity debt, the U.S. 5-year yield hit a two-month high of 1.59 percent overnight, having now risen more than 50 basis points since the most recent Federal Reserve meeting.

Meanwhile, the U.S. dollar index, a measure of its performance against six other major currencies, was up 0.2 percent, heading back up to 80.00, a level that was test overnight when the index hit the highest since Sept 24.

The high-yielding Australian and New Zealand dollars were underperformers among G10 currencies on Thursday. Uncertainty about what measures China may take to pull down inflation has haunted these currencies.

The arrest of Don Ching Trang Chu of Primary Global Research stems from wiretaps and the cooperation of Richard Choo-Beng Lee, a hedge fund manager who pleaded guilty last year as part of the insider-trading prosecution of Galleon Group hedge fund founder Raj Rajaratnam and 22 other traders, lawyers and executives.

Chu, 56, also known as Don Chu, was accused in a criminal complaint in U.S. District Court in New York of introducing hedge funds to corporate executives who gave them insider trading information.

The government scored a victory in the Galleon case on Wednesday when a judge ruled that telephone conversations of Rajaratnam's that were secretly recorded by the FBI were admissible as evidence at his trial. Rajaratnam has pleaded not guilty to charges of conspiracy and securities fraud and is scheduled to go on trial on January 17.

Prosecutors have described the Galleon case as the biggest investigation of insider trading at hedge funds in the United States. The investigation has widened to include subpoenas of several funds with billions of dollars under management.

In subpoenas served on SAC Capital Advisors and other hedge funds and mutual funds, authorities have asked for information about so-called "soft dollar" deals, an arrangement in which a hedge fund client executes trades through a designated brokerage that has some relationship with an expert networking firm such as Primary Global.

Expert networking firms take fees to match up hedge funds with experts in particular industries such as medicine, engineering and technology.

The investigation widened on Monday when FBI agents used search warrants to raid three hedge funds in Connecticut and Massachusetts.

Lee once worked for SAC Capital. There is nothing in Wednesday's complaint accusing SAC Capital of any wrongdoing. A spokesman for SAC declined to comment.

Authorities are looking at funds established by former associates of SAC founder Steven Cohen, according to lawyers and people familiar with the investigation.

A spokesman for Primary Global Research said in a statement that "based upon recent events, PGR has severed its relationship with Mr. Chu."

The statement said Chu served as the firm's liaison in Taiwan and that he had been with PGR for seven years.

Chu, of Somerset, New Jersey, made a brief appearance before a magistrate judge in New York and was released on a bond of $1 million. Chu was not asked to enter a plea to the charges and both of his lawyers declined to comment.

The office of Manhattan federal prosecutor Preet Bharara said Chu had been scheduled to leave the United States for Taiwan on November 28. His lawyers said Chu had planned the trip to visit family. The court was told that Chu had surrendered his U.S. passport and agreed to surrender an expired passport issued by Taiwan.

Prosecutors said Chu had arranged for hedge funds to receive confidential information on companies including Atheros Communications Inc, Broadcom Corp and Sierra Wireless Inc.

The improving economic picture was also brightened by news that consumer sentiment perked up this month to its highest level since June.

But a surprise drop in new home sales last month was a reminder that growth would remain sluggish, and a gauge of core inflation hit an all-time low, supporting the Federal Reserve's November 3 decision to loosen monetary policy.

"The economic recovery in the U.S. is becoming more sustainable, as the improvement in the labor market is finally supporting consumer spending," said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

Initial claims for state unemployment benefits fell 34,000 to a seasonally adjusted 407,000, the Labor Department said on Wednesday, the lowest since mid-July 2008. That was well below economists' expectations for a fall to 435,000.

SPENDING UP, INFLATION SLOWS

Separately, the Commerce Department said consumer spending rose 0.4 percent in October, increasing for a fourth straight month, after a 0.3 percent gain in September. Economists had expected spending, which accounts for about 70 percent of U.S. economic activity, to increase 0.5 percent last month.

"My expectation has been that we'll drop below 400,000 (jobless claims) before the end of the year, and this puts us on a good pace to do so," said Michael O'Rourke, chief market strategist at BTIG in New York. "That would mean that we could add 150,000 jobs per month, which is where we need to be in order to bring the unemployment rate down."

U.S. stock indexes rose modestly, while government debt prices were little changed. The dollar slipped slightly against the euro and yen.

The spending report showed the Fed's preferred measure of core consumer inflation -- the personal consumption expenditures price index -- rose 0.9 percent. That was the smallest since records started in 1960 and well below the U.S. central bank's 1.7 percent to 2 percent comfort zone.

A third report showed the Thomson Reuters/University of Michigan's final November consumer sentiment index climbed to 71.6 from 67.7 in October. For details see

Though spending rose last month, it was still not robust. Concerns about low inflation and slow economic growth prompted the Fed this month to pump more money into the economy through additional purchases of $600 billion worth of government debt.

The asset purchasing program, also known as quantitative easing in financial markets, is intended to drive already ultra low interest rates further down and boost domestic demand.

The slow nature of the recovery from the worst recession since the 1930s was underscored by new home sales, which dropped 8.1 percent to a 283,000 unit annual rate in October. Analysts polled by Reuters had forecast new home sales rising to a 310,000 unit pace in October. Compared to October last year, sales were down 28.5 percent.

With unemployment stuck at an uncomfortably high 9.6 percent, homeowners are struggling to hang on to their houses, keeping the foreclosure wave high and stifling the sector's recovery. Data on Tuesday showed a drop in the sales of previously owned homes last month.

October's weak sales pace pushed up the supply of new homes on the market to 8.6 months' worth from 7.9 months' worth in September. However, there were 202,000 new homes available for sale in October, the lowest since June 1968.

The criminal complaint unsealed in U.S. District Court in New York said Don Ching Trang Chu, also known as Don Chu, promoted the services of his California-based firm, Primary Global Research, by arranging for corporate executives to leak inside information to hedge funds.

Chu's arrest stems from the cooperation of Richard Choo-Beng Lee, a fund manager who pleaded guilty last year as part of the prosecution of Galleon Group hedge fund founder Raj Rajaratnam and 22 other traders, lawyers and executives.

Prosecutors described that case as the biggest probe of insider trading at hedge funds in the United States, but the investigation has widened to include subpoenas of several funds with billions of dollars under management.

FBI agents used court-approved search warrants to raid three hedge funds in Connecticut and Massachusetts on Monday.

In charging Chu, prosecutors said he arranged for hedge funds to get tips on companies including Atheros Communications Inc, Broadcom Corp and Sierra Wireless Inc in 2008 and 2009.

Chu's lawyer, Jeffrey Plotkin, could not immediately be reached to comment. The office of Manhattan U.S. Attorney Preet Bharara said Chu was scheduled to depart to Taiwan on November 28.

He is expected to appear in Manhattan federal court later on Wednesday.

"SOFT DOLLARS"

In the criminal complaint, which was signed by FBI special agent B. J. Kang, one of the lead investigators on Galleon, authorities said consultants with expert network firms "can earn hundreds of dollars per hour" for their services.

The complaint said that one way expert network firms get paid is through "soft dollars," an arrangement in which a hedge fund client executes trades through a designated brokerage that has some relationship with an expert network firm.

In subpoenas served on SAC Capital and other hedge funds and mutual funds, authorities asked for information about any soft dollar deals those funds had.

Prosecutors allege that from 2008 to 2009. Lee struck up a relationship with Chu, while Lee was working at Spherix Capital. Spherix Capital, is a now-closed San Francisco fund that Lee managed with Ali Far.

Both Lee and Far pleaded guilty to trading on inside information in the Galleon case and are cooperating witnesses.

Far worked at Galleon for many years. Lee is a former trader and analyst at SAC Capital Advisors. As part of his cooperation agreement, Lee agreed to tell prosecutors of any insider trading he engaged in at Steven Cohen's firm, which he left more than six years ago.