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As analysts and investors brace for earnings reports from more than a dozen major U.S. manufacturers over the next two weeks, they will eye revenue growth as one of the surest signs of health for the industrial sector over the next year.

Sales growth will be critical to profits this year, since major companies including General Electric Co (GE.N), United Technologies Corp (UTX.N) and 3M Co (MMM.N) will likely face rising costs of everything from copper to payroll, which they had slashed going into the recession.

Cost management will matter if the sector is to continue its strong run on Wall Street. Standard & Poor's industrials group .GSPI rose about 20 percent over the past year, the second-biggest gain in the broad S&P 500 index .SPX after the S&P consumer discretionary group .GSPD, which rose almost 26 percent.

"From a top-line, revenue side, we're going to see some modest expansion there," said Peter Klein, senior portfolio manager at Fifth Third Asset Management, in Cleveland, Ohio. "This is what I'm sort of tuning my ear to hear. And if we don't hear it, then maybe some of this ebullience that we've seen in the industrials since this summer will flatten out."

For a related graphic click: r.reuters.com/res86r

FOREIGN DEMAND CRITICAL

Demand outside the United States will be critical to that momentum. More manufacturing executives expect their shipments outside the United States to rise in the coming months, while demand at home eases, according to a Manufacturers Alliance/MAPI survey released last week.

The group's overall composite index of manufacturing activity slipped to 75 from 77, but remained well above the 50 market that separates growth from contraction.

"It suggests maybe a slightly slowing rate of recovery, but still continued expansion," said Donald Norman, an economist with the Arlington, Virginia-based group.

China, a major area of focus for big industrial operations including Caterpillar Inc (CAT.N), Honeywell International Inc (HON.N) and Rockwell Automation Inc (ROK.N), may be the subject of more interest than usual this quarter in the wake of a Wednesday summit meeting between U.S. President Barack Obama and Chinese President Hu Jintao.

COST PRESSURES

Higher raw material prices, particularly for copper, will be a major drag on profit growth this year, and leave executives looking for ways to raise their selling prices on heavy equipment.

"The bigger challenge this year is to stem the margin impact of commodity inflation and seeing what they are able to pass through on pricing, while at the same time leveraging the top-line growth they're starting to show," said Steven Winoker, an analyst at Bernstein Research in New York.

"We're getting back into a more positive cycle and they're starting to spend again," he added.

* Apple shares will be in the spotlight after the company said Chief Executive Steve Jobs was taking medical leave for the third time since 2004, reviving fears over the long-term future of the iPhone- and iPad-maker and sending the company's stock traded in Frankfurt tumbling more than 8 percent.

* On the earnings front, investors were bracing for results from a number of companies including Apple, Citigroup (C.N) and IBM (IBM.N).

* Goldman Sachs (GS.N) said it will limit its private placement of shares of social networking site Facebook to investors outside the United States, citing "intense media coverage."

* Brewing giant SABMiller (SAB.L) beat forecasts with a 3 percent rise in beer volumes in the last three months boosted by growth in Africa and Asia offsetting a fall in Colombia, hit by the heaviest rain for 50 years.

* European planemaker Airbus (EAD.PA) celebrated a surprise win in the annual orders race against Boeing (BA.N) with the 10,000th plane sale in its 40-year history, part of a $5 billion order from Virgin America. Separately, Boeing Co (BA.N) resumed certification tests of its 787 Dreamliner on Monday for the first time since an in-flight electrical fire in November knocked those trials off schedule.

* GlaxoSmithKline (GSK.L) will record a legal charge of $3.4 billion for the fourth quarter, effectively wiping out its profit, as it settles further claims related to Avandia and sales practices.

* South African retailer Massmart's (MSMJ.J) shareholders have accepted a takeover by U.S. group Wal-Mart (WMT.N), setting up the world's largest retailer for a potential battle with local unions.

* European stocks were up 0.7 percent in morning trade, led by mining shares after Rio Tinto's (RIO.L) output figures pleased investors and as metal prices climbed.

* The S&P 500 ended a seventh straight week of gains with a banks-led rally amid healthy volume after encouraging financial results from JPMorgan.

* The Dow Jones industrial average .DJI added 55.48 points, or 0.47 percent, to 11,787.38. The Standard & Poor's 500 .SPX rose 9.48 points, or 0.74 percent, to 1,293.24. The Nasdaq Composite .IXIC gained 20.01 points, or 0.73 percent, to 2,755.30.

(Reporting by Blaise Robinson; Editing by Jon Loades-Carter)

The world's most valuable technology company announced on Monday that Jobs would take a medical leave of absence without specifying a return date or detailing Jobs' condition, leaving investors in an information vacuum.

The surprise announcement -- made on a U.S. market holiday -- dragged Apple shares down more than 6 percent in European trading. They are up 62 percent in the past 12 months on the Nasdaq stock exchange.

"Steve Jobs is seen by the market to be a major force in Apple's strategic direction," said Richard Windsor, global technology specialist at Nomura. "If his pancreatic cancer has returned, one could be quite worried."

Jobs' latest leave comes nearly two years after he took a six-month break to undergo a liver transplant. He also took time off after pancreatic surgery in 2004.

Apple has not dwelt on Jobs' health, and Jobs himself asked for respect for his privacy in a memo to employees made public on Monday.

In Jobs' absence, it will be up to chief operating officer Tim Cook to decide how much to tell investors about the absent chief executive, and what Apple plans to do with its $50 billion-plus pile of cash and investments.

Less of a showman than Jobs, the 50-year old Alabama native is not expected to make any grand pronouncements. But he is regarded as a safe pair of hands for the company, having stood in for Jobs successfully twice before.

In Asia, tech shares gained, helped by hopes of a recovery in chip prices and expectations that nimble firms may slow the runaway success of Apple after the news that Jobs would take medical leave.

Still, analysts said the impact on Apple's operations and its Asian rivals and partners should be limited in the short-term given a strong product line-up.

"Apple's roadmap is all set and its iPhone 5 is ready to go, leaving little room for competitors to cut into its share," said Bonnie Chang, an analyst at Yuanta Securities in Taipei.

HUGE HOLIDAY SEASON

Aside from Jobs' health, the company is entering 2011 on a roll, a cash-generating machine with surging sales across its product lines, even as it confronts rivals determined to halt its stunning run of success.

Wall Street is expecting Apple's quarterly revenue to swell more than 50 percent to more than $24 billion after a bumper holiday shopping season. That would be a sparkling performance for a company of any size, much less one with a market value above $300 billion.

Apple's advantages are well-documented: the global spread of the iPhone, which is expected to sell more than 60 million units this year; the rise of the iPad, which single-handedly created the tablet computing market; and continued strong growth from the resurgent Mac line of computers.

Analysts on average expect the third-largest U.S. bank by assets to post a profit of 8 cents per share for the fourth quarter of 2010, according to Thomson Reuters I/B/E/S.

That would compare with a year-ago loss of 33 cents per share.

Citigroup has largely recovered from the losses that drove it into the government's arms during the financial crisis and has shed most of the resulting government ownership.

The U.S. Treasury finished selling off its common share stake in Citigroup in December. The Treasury said on Friday it would unwind its final investment in the bank by auctioning off remaining warrants.

Shares of Citigroup closed at $5.13 on Friday -- their highest point since August 2009. The bank's shares have surged 55 percent since the beginning of 2010, and gained additional momentum last month after the U.S. government sold the last of its stake.

The bank's fourth-quarter profit is expected to lag that of larger rival JPMorgan Chase & Co, which beat analyst expectations on Friday and boosted investor sentiment about the outlook for the banking industry.

JPMorgan "set the bar very high," said Michael Holland, who oversees $4 billion of assets as chairman of Holland & Co.

"I think Citi is probably going to do very well but ... (Chief Executive) Vikram Pandit has a tall order to fill here when it comes to doing the same thing," he added.

Citigroup, like other banks, has seen its losses from bad loans shrink over 2010. But its revenues faltered in the face of weak loan demand and a slump in trading volumes over the second half of the year.

JPMorgan Chase said on Friday that it was starting to overcome both conditions, giving bank investors hope that other banks could start to see an increase in loan demand and trading profit this year.

(Reporting by Maria Aspan; Editing by Muralikumar Anantharaman)

Euro zone finance ministers on Monday discussed boosting the effective lending capacity of the currency bloc's bailout fund, but they made no firm decision and Germany, the biggest euro zone economy, said there was no rush to take action now.

The euro was near $1.3278 as of 0205 GMT, after having slid to a low of around $1.3243 overnight, well off a one-month high near $1.3460 set last Friday.

"The markets had gone a bit too far in expecting an increase in the rescue fund. German opposition (to the increase) seems quite strong and (German Chancellor Angela) Merkel may be reluctant to push it ahead of local elections," a trader at a Japanese bank said.

As worries over the euro zone's debt crisis linger, Greece's deputy prime minister said on Monday extending the repayment of the nation's debt could help the overborrowed country emerge from its debt crisis.

Stock market players wanted to see Wall Street's reaction to Apple's announcement, which knocked U.S. stock futures sharply lower on Monday when U.S. markets were closed for a holiday.

Japan's Nikkei average .N225 rose 0.2 percent 10,521.27, while the MSCI index of Asian shares outside Japan .MIAPJ0000PUS was little changed.

Tech shares outperformed, however, with the MSCI Asian IT index outside of Japan up nearly 1 percent.

Samsung (005930.KS), a rival to Apple in some business areas, jumped 2.7 percent, buoyed as well by regional gains in shares of memory chip makers after a newspaper report that Japan's Elpida planned to raise chip prices by about 10 percent.

Elpida (6665.T) rose 2.6 percent.

Investors were also closely watching the Shanghai Composite Index .SSEC after it slumped a day earlier on China's decision to raise lenders' reserve requirements late last week. The decline weighed on bourses across Asia which have drawn considerable support from China's robust economic growth.

The key Shanghai index fell 0.7 percent in early trade after sliding 3 percent on Monday, but Hong Kong's Hang Seng Index .HSI managed to avoid the downdraft and rose 0.4 percent on hopes for stronger corporate earnings.

U.S. crude futures stood little changed above $91 a barrel on Tuesday after falling the previous day when the dollar strengthened and a major Alaskan oil pipeline resumed full operations. Spot gold was steady at around $1,361 an ounce.

(Additional reporting by Ian Chua in Sydney and Antoni Slodkowski in Tokyo)

(Editing by Kim Coghill)

(Created by Yoko Nishikawa)