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Huntington Bancshares (HBAN.O) said it was issuing stock and bonds to help repay $1.4 billion it received under the U.S. Government's Troubled Asset Relief Program in November 2008.

First Horizon National Corp (FHN.N) said it is selling debt and equity to pay off $867 million of TARP aid.

Huntington's shares fell after the news because the bank will sell so much equity to repay the government, analysts said. First Horizon's shares rose as investors cheered its move to shed government support.

Analysts said these repayment plans could be the first of another wave of TARP repayments, and suggest that the U.S. banking system is continuing to heal after the 2008 crisis.

Banks that have yet to repay the government should think about doing it soon, said Jeff Davis, bank analyst at boutique bank Guggenheim Partners.

"If you're a bank that does wait now, the market might be left to assume there are deeper problems," Davis said.

The offerings from Huntington and First Horizon come one year after the largest U.S. banks -- including Citigroup Inc (C.N), Bank of America Corp (BAC.N) and Wells Fargo & Co (WFC.N) -- raised tens of billions of dollars to repay their government bailout aid. The first wave of banks to repay TARP came in the summer of 2009, and included Goldman Sachs Group Inc (GS.N) and JPMorgan Chase & Co (JPM.N).

BIG, BUT NOT TOO BIG

Despite the latest round of offerings from smaller lenders, the largest U.S. regional banks may still be months away from buying back the government's temporary investment.

Regional banks SunTrust Banks Inc (STI.N), Regions Financial Corp (RF.N), Fifth Third Bancorp (FITB.O) and KeyCorp are the four largest U.S. lenders that have yet to repay TARP.

The four banks were part of a larger group of the 19 biggest banks that underwent U.S. government stress testing in Spring 2009.

Huntington, with $53 billion in assets, and First Horizon, with $25 billion, fell well below that threshold.

Now, the Federal Reserve is retesting all of the "stress test" banks before allowing them to repay TARP, raise their dividends or repurchase shares.

Results are not expected until first quarter 2011, leaving a window for smaller banks to repay TARP.

Control of credit issuance is one of the most important monetary policy tools in China and many in the market had assumed that Beijing would lower the new lending objective next year as a way of tamping down on inflationary pressures.

But the report on the front page of the China Securities Journal, citing an unnamed source described as authoritative, suggested otherwise.

"The Chinese economy is very big now and a target of 7.5 trillion yuan in new loans will not trigger all-round inflation," the newspaper quoted the source as saying.

A Reuters poll of 26 economists on Monday forecast that Beijing would aim for 7 trillion yuan in new lending next year.

Chinese leaders gave greater prominence to the fight against inflation in their statement on Sunday at the end of the Central Economic Work Conference, an annual meeting at which they chart policy for the coming year.

But at the same time as vowing to focus on price stability, they also said that they will strike a balance between controlling inflation and maintaining growth.

In its report, the China Securities Journal said the focus would change over the course of the year, with the battle against inflation likely to top the agenda in the first half but supporting growth to remain the overriding objective.

"China's inflation will probably be higher in the first half of next year and then ease in the second half. It may peak in the second quarter. So policies in the next three to six months will mainly to curb inflation," it said.

"But inflation next year will not be as high as expected. So monetary policy will favor quantitative measures. China will be very cautious in raising interest rates. It will only raise interest rates when inflation deteriorates," it added.

The report also said the government would likely aim for 16 percent in the wider M2 measure of money growth, which would mark a slowdown from this year's roughly 20 percent pace.

It added that China's five biggest lenders were aiming to maintain new lending at unchanged levels next year from this year, while smaller banks we're talking about an expansion.

In bankruptcy, the company officially known as The Great Atlantic and Pacific Tea Co GAPTQ.PK will get a chance to perform radical surgery on itself as it faces growing pressure in the low-margin supermarket business.

The company received interim approval from a bankruptcy judge on Monday for an $800 million bankruptcy loan, which analysts said could give it 18 months for an overhaul.

"It's a tough workout," said Joe Stauff, who analyzes distressed companies for Susquehanna International Group.

Stauff said the company could close more than 100 of its 395 stores, which operate under the names of A&P, Waldbaum's, SuperFresh, Pathmark, Food Basics and The Food Emporium in the northeastern United States.

"As we said when we announced our turnaround plan in October, we continue to analyze our store portfolio and will do so in Chapter 11," A&P spokesman Eric Andrus said.

A&P rushed into bankruptcy as its cash was dwindling and a debt payment was looming this week. Unlike most big bankruptcies, the grocery chain does not have a prearranged

plan for coming out of court protection.

The company has been squeezed by cut-rate operators of warehouse stores such as Costco Wholesale Corp (COST.O), as well as Wal-Mart Stores Inc (WMT.N) and Target Corp (TGT.N), which have expanded into groceries. At the same time, wealthier shoppers have been lured away by higher-end stores such as Whole Foods Market Inc (WFMI.O).

Unable to pass along rising wholesale costs at the checkout, supermarkets have been forced to gain scale through size or by tightly controlling costs such as leases.

Several other regional supermarkets have gone through bankruptcy in recent years, including Bruno's, Bi-Lo, Penn Traffic Co and Bashas'.

BLUNDER AFTER BLUNDER?

Analysts expect A&P to take a hard look at its vendor contracts, leases and other operational costs, as well as its balance sheet and finances.

"They tended to overpay for everything. From vendors to landlords they were always an easy mark," said supermarket consultant David Livingston of DJL Research in Waukesha, Wisconsin. "They just made one blunder after another."

The company does have some important backers. Ronald Burkle, of the Yucaipa Companies LLC, invested in the company's preferred stock last year in an attempt to fund a revival.

The plan agreed to by President Barack Obama and Republican leaders last week could push up debt levels, increasing the likelihood of a negative outlook on the United States rating in the coming two years, the ratings agency said.

A negative outlook, if adopted, would make a rating cut more likely over the following 12-to-18 months.

For the United States, a loss of the top Aaa rating, reduce the appeal of U.S. Treasuries, which currently rank as among the world's safest investments.

"From a credit perspective, the negative effects on government finance are likely to outweigh the positive effects of higher economic growth," Moody's analyst Steven Hess said in a report sent late on Sunday.

After Obama announced his plan, Treasury prices fell sharply in volatile trade last week and yields have hit a six-month high, in part due to concerns over the effect the package will have on government debt levels.

If the bill becomes law, it will "adversely affect the federal government budget deficit and debt level," Moody's said.

On Monday, the Democratic-led U.S. Congress moved toward grudging approval of President Obama's deal with Republicans to extend expiring tax cuts, even for the wealthiest Americans.

Last week, Moody's and Fitch Ratings both expressed concerns about the U.S.'s rating longer term, with Moody's fearing the impact if the tax cuts become permanent.

In a market obsessed with the euro sovereign debt crisis, the Moody's note reminded foreign exchange investors about their worries of growing U.S. debt and was a factor pressuring the dollar on Monday.

The cost of insuring U.S. government debt in the credit default swap market was little changed on Monday at around 41 basis points, or $41,000 per year to insure $10 million in debt for five years, according to Markit Intraday.

NEGATIVE IMPACT

A negative outlook would indicate that the rating may be more likely to be cut from the top Aaa rating over the following 12 to 18 months. The United States currently has a stable outlook, indicating a rating change is not anticipated over this time frame.

Moody's estimates the cost of the funding the proposed tax bill, along with unemployment benefits and other policy measures, may be between $700 and $900 billion, which will raise the ratio of government debt to GDP to 72 to 73 percent, depending on the effects on nominal economic growth.

This means that the government's debt relative to revenues will decline much more slowly over the coming two years, to just under 400 percent from 420 percent at the end of fiscal year 2010.

"This is a very high ratio compared with both history and other highly rated sovereigns," Moody's said.

(Reporting by Karen Brettell in New York and Walter Brandimarte in Sao Paulo; Editing by W Simon )