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Goldman expects to raise $1.5 billion for Facebook, the wildly popular site used as a message board and for online social networking.

The chance to buy a slice of Facebook ahead of any future public listing attracted widespread commentary and news coverage, which potentially could bring it under regulatory scrutiny.

"In light of this intense media coverage, Goldman Sachs has decided to proceed only with the offer to investors outside the U.S.," the company said in a statement provided to Reuters.

Goldman began notifying clients of its decision on Sunday.

"We regret the consequences of this decision, but Goldman Sachs believes this is the most prudent path to take," the investment bank said in the statement on Monday.

Goldman said the decision not to conduct a private placement of the shares of Facebook, a closely held company, in the United States was solely its own and was not required or requested by any other party. That would include the U.S. Securities and Exchange Commission, which is scrutinizing secondary market trading in Facebook shares.

"Once this event received widespread publicity, it conceivably could be argued that Goldman was benefiting from a general solicitation, via news reports of its efforts on behalf of Facebook," former SEC Chairman Harvey Pitt said.

"My impression is that Goldman is using that as an excuse to save face, given the SEC investigation that has been publicized in the press, as a result of this proposed transaction," said Pitt, who is chief executive of consulting firm Kalorama Partners.

While general solicitation and advertising is still prohibited overseas, if the publicity has not been as widespread in other countries, the issuer and the underwriter could get comfortable proceeding with the offering, said an industry attorney who has advised companies with similar issues.

The Washington, D.C.-based attorney asked not to be identified because of the sensitivity of the issues surrounding private placements.

Goldman said it had originally planned to conduct a private placement in the United States and offshore.

Facebook already has received a $450 million investment from Goldman Sachs and $50 million from Russian investment firm Digital Sky Technologies, in a deal that valued the company at $50 billion.

SPECIAL FUND

Several weeks ago, Goldman approached its best private wealth clients with an offer to take part in a special fund that will own shares in the world's biggest social networking site. The deal would allow Goldman to offer clients a hot investment opportunity, while allowing Facebook to remain a private company.

Apple's shares traded in Frankfurt (AAPL.F) fell 7.5 percent by 1438 GMT, while futures for the S&P 500 and tech-heavy Nasdaq dropped 0.3 and 0.9 percent, respectively.

The U.S. markets are closed for a holiday on Monday and will resume trading on Tuesday.

During Jobs' leave of absence, Chief Operating Officer Tim Cook will be responsible for day to day operations. Jobs will continue as CEO and will be involved in major strategic decisions for the company.

He did not say for how long he would be on leave.

"Honestly, the effect on the company will probably not be that great in terms of fundamentals," said Richard Windsor, global technology specialist at Nomura.

"Perception of the company is another matter. Steve Jobs is seen by the market to be a major force in Apple's strategic direction. If his pancreatic cancer has returned, one could be quite worried."

Jobs underwent a liver transplant while on leave, returning to the company in late June.

(Reporting by Dominic Lau and Georgina Prodhan; Editing by David Holmes)

Upbeat earnings from JPMorgan (JPM.N) helped lift some financial stocks in the region, but mining stocks struggled after China on Friday raised banks' required reserves (RRR) for the fourth time in over two months, fuelling worries the country's voracious appetite for commodities will cool.

"With growth still strong, Beijing will likely battle inflation wholeheartedly. Get ready for more hikes in both RRR (at least another 150 bps) and interest rates (two, 25 bps) in the next six months," HSBC economists Qu Hongbin and Sun Junwei wrote in a report.

Japan's Nikkei index .N225 rose 0.4 percent, helped in part by gains in financial shares. Sumitomo Mitsui Financial Group (8316.T) climbed 0.7 percent.

"The market is recouping losses made last week and sentiment has been brightened by financials gaining on a strong start to the U.S. earnings season," said Yumi Nishimura, a senior market analyst at Daiwa Securities Capital Markets.

Stocks elsewhere in Asia were more subdued, with MSCI's index of Asia Pacific shares excluding Japan .MIAPJ0000PUS slipping 0.3 percent.

Hong Kong's Hang Seng index .HSI, Australia's S&P/ASX 200 index .AXJO and China's Shanghai Composite Index .SSEC were all lower. South Korea's KOSPI .KS11 hit a record high at 2,118.86, before paring gains to be little changed on the day.

Global miners BHP Billiton (BHP.AX) and Rio Tinto (RIO.AX) both fell about 1.0 percent.

According to EPFR Global, flows into the emerging market equity funds that it tracks slowed in the week ended January 12 due to worries that high inflation rates will trigger more measures to rein in price pressures.

But underlying appetite for risk persisted, with emerging market local currency and high yield bond funds enjoying solid weeks, EPFR noted.

Asian high-yield bond issuers have wasted no time this year in taking advantage of the healthy appetite for their paper.

Last week, PRC property developer Evergrande Real Estate Group made history with a 9.25 billion yuan ($1.4 billion) synthetic renminbi bond issue, the biggest to date in the fast growing market.

EURO ZONE MEETING EYED

The euro slipped to $1.3338, having rallied some 4 percent last week to reach $1.3456 on Friday -- a high not seen since mid-December.

European Central Bank President Jean-Claude Trichet's tough talk on fighting inflation and expectations that the EFSF rescue fund will be expanded had helped underpin euro.

The last time Hu and President Barack Obama met face-to-face was at the Group of 20 leaders summit in Seoul in November, when Washington was on the defensive because of widespread criticism over the Federal Reserve's $600 billion bond-buying program.

Instead of pressuring China to allow its yuan currency to rise more rapidly, Obama found himself trying to convince allies that the United States was not intentionally devaluing the dollar to gain a trade advantage.

Back then, China's Vice Foreign Minister Cui Tiankai said "they owe us an explanation" over the Fed's bond buying, and admonished the U.S. central bank to "consider the impacts on other countries in the world when they make their decisions, not just their own economy."

The circumstances will look a little different when Hu visits the White House on Wednesday.

Currency tensions have cooled somewhat. China's high inflation means the yuan has appreciated in real terms considerably more than the nominal exchange rate shows.

Republican party gains in Congress suggest there may be less pressure coming from lawmakers to label China a currency manipulator or impose stiff new tariffs.

"There isn't the unified sense that there was before the mid-term elections that the U.S. needs to go after China," said Eswar Prasad, a Brookings Institution economist and former International Monetary Fund official.

As for those fears about the Fed inflicting dollar damage, the dollar has actually strengthened against a basket of currencies since the central bank announced its bond-buying plan in early November.

Hu will also be able to point to China's latest trade data showing December exports were not as strong as most economists expected. Comparable U.S. data is not yet available, but figures for November showed exports to China hit a record high of $9.5 billion, bolstering China's argument that it is doing its part to rebalance global growth.

Cui, the vice finance minister, once again spoke out ahead of this week's summit, but his tone was softer than in November. His most pointed comment was that Beijing would welcome assurances its financial assets in the United States were safe.

Treasury Secretary Timothy Geithner shrugged that off as nothing more than "the kind of things that you typically see ... foreign ministry people say in the run-up to these meetings. It's the typical pattern, nothing exceptional or interesting in this."

SORE SPOTS

To be sure, there are still plenty of trade frictions.

The U.S. trade deficit with China swelled to $252.4 billion through November, up 21 percent from the same period a year earlier. China's foreign exchange reserves climbed to $2.85 trillion in December, much of it held in dollar-denominated assets, making China Washington's largest creditor.