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Greece's government won a vote of confidence late on Tuesday, a crucial step toward securing further short-term and longer-term financial aid from the European Union and the IMF as the country tries to avoid the euro zone's first sovereign debt default.

"For the next three years, we're going to see different economies work out different problems. For European economies, especially Greece, it would be through default," Mohamed El-Erian, chief executive of PIMCO, told reporters in Taipei on Wednesday via a video conference.

He didn't identify which economies other than Greece he was referring to.

El-Erian has suggested in the past that Greece would default and that Europe risks wasting money for nothing by pumping billions of dollars into the ailing economy.

"Nothing has been done to enhance growth," he said. "No single (Greek) indicator has shown strength. They are afraid a restructuring would hurt European banks."

He doubted a Greek default could trigger another global financial crisis.

"Ireland, Portugal, Italy and Spain would have to be involved. But Greece is too small in terms of economic impact," El-Erian said.

PIMCO, or the Pacific Investment Management Co, is based in California and is the world's biggest bond fund manager with nearly $1.3 trillion in assets under management.

Horacio Valeiras, chief investment officer of fund firm Allianz Global Investors Capital (AGIC), predicted that Ireland and Portugal, countries that also received financial bailouts in the wake of the global credit crisis, will have to restructure their debts.

PIMCO and AGIC are units of German insurer Allianz, which organised briefings for the media and investors.

"We are not investing in Greece, Ireland, Spain and Portugal," said Valeiras, who appeared in person at the press briefing. He said default in Greece was "inevitable".

The confidence vote in Athens came after a European ultimatum requiring the debt-choked state to agree to a five-year austerity package of measures within the next two weeks or miss out on a 12-billion euro tranche of aid money.

Without the loan, Athens will run out of cash next month and policymakers fear a default would send shockwaves through the global financial system.

European officials are also considering a second bailout package worth an estimated 120 billion euros that is meant to extend Greece's year-old 110 billion euro deal and fund it into 2014.

Sovereign debt elsewhere in the developed world has also soared since the global crisis, affecting investment decisions.

The fiscal weight of the global financial crisis prompted PIMCO to dump U.S. sovereign bonds. The fund's $236.9 billion PIMCO Total Return Fund said in March it had completed a move in February to drop all its investments in U.S. government debt.

Earlier this month, Tomoya Masanao, the head of Japan portfolio management for PIMCO, said the fund manager had cut holdings of Japanese and U.S. government debt to shift money into more attractive investments, such as debt issued by the likes of Australia, Canada, Brazil and Mexico.

(Reporting by Faith Hung; Editing by Neil Fullick)

The euro last traded at $1.4366, extending its recovery from a three-week low of $1.4073 it hit last Thursday, but below the high of $1.4435 it touched after the vote in Athens, bringing the beleaguered country a step closer to a 12 billion euro aid package.

If Greece avoids defaulting on its sovereign debt, it could help renew confidence in the single currency, though the head of the world's largest bond fund Pimco said Greece's way out of its debt problem would be through default.

Next in line is the Fed meeting which began on Tuesday, against the backdrop of a weakening U.S. economy that will likely force policymakers to plan for the possibility that things may get worse.

Chairman Ben Bernanke will address the media at 1815 GMT and is widely expected to revise down the Fed's earlier quarterly forecasts for U.S. GDP growth.

This is unlikely to be good news for the dollar, Credit Agricole's head of global FX strategy Mitul Kotecha said in a briefing note, "given that the Fed is set to downgrade its growth forecasts, with the comments on the economy likely to sound a little more downbeat given the loss of momentum recently as reflected in a string of disappointing data releases."

The dollar index .DXY, which tracks the dollar against a basket of major currencies, fell to a one-week low at 74.516, well off last week's peak of 76.015. It was last at 74.778.

Against the yen, the dollar was little changed at 80.25, comfortably within the prevailing 79.50-81.50 range.

Greece's vote outcome sheered Asian stock markets, especially Japan's Nikkei .N225 which rose for the third day in a row, gaining 1.4 percent at 9595.26.

Financial services firms were among the big gainers, following rivals elsewhere which rose on hopes that the vote will prove a step toward resolving the European debt crisis, one of the most persistent worries for markets.

"The market is up on Greece, but it's a temporary rise on a news event. We may see some more short-covering going into the afternoon, but that's about it -- fundamentals haven't changed a notch," said Mitsushige Akino, chief fund manager for Ichiyoshi Investment Management.

MSCI's index of Asia-Pacific stocks .MIAPJ0000PUS excluding Japan was up 0.7 percent, while indices in Hong Kong .HSI and South Korea .KS11 also rose.

Brent crude oil for delivery in August made a partial recovery to $111.30 a barrel after falling more than 70 cents on Tuesday, largely on ongoing worries about the euro zone.

Gold inched up to $1,546.65 per ounce by 0200 GMT, little changed from Tuesday's close.

Gold, one of the chief beneficiaries of worries about the security of currencies and other assets, set a record high of $1,575.79 per ounce in early May. Copper was down slightly at $9,039 per tonne after rising almost 1 percent in the previous session.

The regulator's complaint against the banking giant was larded with excerpts from internal JPMorgan communications that indicated bankers sold a collateralized mortgage obligation in 2007 to ensure that it could get credit-scarred mortgage securities off its books.

"We are soooo pregnant with this deal, we need a wheel-barrel to move around," the head of CDO distribution wrote in a March 22, 2007 email to the sales staff. "Let's schedule the cesarian, please!"

The settlement with JPMorgan, the second-largest U.S. bank, echoes on a smaller scale the $550 million accord that Goldman Sachs Group Inc reached last July over its Abacus collateralized debt obligation.

Both cases involved charges that banks let hedge fund clients structure complex securities -- and then bet against them -- without disclosing their involvement to investors.

The SEC on Tuesday also filed civil charges against Edward Steffelin, 41, a former managing director at the now bankrupt GSC Capital Corp, which served as collateral agent for the JPMorgan CDO marketed as Squared CDO 2007-1.

It alleged that he hoped to get a job with the Magnetar Capital LLC hedge fund, while helping to create marketing materials that failed to disclose that Magnetar chose some securities in the CDO and had a nearly $600 million bet that they would lose value.

JPMorgan sold $150 million of Squared CDO notes to pension funds and investors worldwide that lost most of their value in just 10 months, the SEC said.

"This is deja vu all over again," said John Coffee, a securities law professor at Columbia University, recalling the Goldman case with a quote from baseball legend Yogi Berra. "If Goldman and JPMorgan were doing this, it wouldn't surprise me if others were as well."

FULL PIPELINE

No individual bankers were charged in the JPMorgan case, but SEC enforcement chief Robert Khuzami told reporters the agency continues to pursue individuals and has charged roughly 50 people in cases related to the credit crisis of 2008.

Earlier in the day, SEC Chairman Mary Schapiro also addressed criticism that about the lack of charges against individuals.

"It is not for lack of will and desire that we are not seeing as many senior people being named in these cases," Schapiro said. "If we could, we would be naming them."

Fabrice Tourre, a Goldman vice president whose case is ongoing, was the only individual charged by the SEC over Abacus.

Ms. Schapiro said the SEC will continue to bring charges against banks.

"We have a pretty full pipeline of post-crisis cases," she said. "They relate to disclosure failures, particularly around structured products, accounting issues and so forth."

EXACERBATING A CRISIS

Critics say CDOs such as Squared and Abacus allowed banks and mortgage lenders to dump credit-deficient loans and then make more, further inflating the subprime mortgage bubble even as signs of excess were apparent.

JPMorgan agreed to pay a $133 million fine, plus $20.6 million of improper profits and interest. About $125.9 million will go to investors in the Squared CDO, and $27.7 million will go to the U.S. Treasury.

The accord also requires JPMorgan to change its policies for reviewing and approving offerings of mortgage securities. It must be approved by U.S. District Judge Richard Berman in Manhattan. Steffelin's case was assigned to a different judge.

JPMorgan did not admit wrongdoing, but said it lost nearly $900 million on the Squared transaction. It also said the SEC's penalty reflected in part its voluntary decision to pay $56.8 million to investors in a separate CDO, Tahoma CDO I.

Unlike Goldman, which settled a fraud charge indicating it acted with intent or recklessness, JPMorgan was charged in a way that suggests its activity may have been negligent.

Alex Lipman, a partner at Nixon Peabody who represents Steffelin, criticized the SEC's claims, and denied that his client had been pursuing a job with Magnetar.

"We are baffled by the SEC's decision to proceed against an individual in a contested proceeding on a negligence theory," he said. Steffelin "did not work for the underwriter and had no responsibility for the contents of the offering memorandum."

Magnetar in a statement said SEC staff advised it not to expect any enforcement action by the regulator. "We did not control the asset selection process and our mortgage CDO investment strategy was designed and implemented to maintain a market-neutral portfolio," it said.

The SEC said Squared sales materials indicated that the underlying investments in the CDO were chosen by a GSC affiliate, but failed to reveal that Magnetar played a significant role.

The SEC earlier this year sent a "Wells notice" indicating possible civil charges to both Steffelin and Michael Llodra, JPMorgan's former global head of structured product CDOs.

Llodra was not charged on Tuesday. He could not immediately be reached for comment. Walton Securities Inc, which according to regulatory records now employs Steffelin, did not return a call seeking comment.

JPMorgan shares closed up 43 cents, or 1.1 percent, at $40.91 on the New York Stock Exchange.

The cases are SEC v. JPMorgan Securities LLC, U.S. District Court, Southern District of New York, No. 11-04206; and SEC v. Steffelin in the same court, No. 11-04204.

(Reporting by Sarah N. Lynch and Jonathan Stempel; Additional reporting by David Henry, Andrew Longstreth, Andrea Shalal-Esa and Dan Wilchins; editing by Gerald E. McCormick, John Wallace, Jed Horowitz and Bernard Orr)

The National Association of Realtors said on Tuesday sales slipped 3.8 percent month over month to an annual rate of 4.81 million units, the lowest since November.

It was the second straight month of declines in home resales, but less than the 5.9 percent drop to a 4.80 million-unit pace that economists had expected.

While the fall in sales last month -- which was telegraphed by a steep fall in pending home sales contracts in April -- was partly due to bad weather in some parts of the country, including tornadoes, it underscored the fundamental weakness in the sector.

The report was also the latest set of data to confirm a sustained weakness in the economy through the second quarter, which has been marked by a sharp slowdown in regional factory activity, soft retail sales and anemic employment growth.

"This one report does not change our long-term view in that we still believe the housing market will remain a drag on overall economic activity in 2011 and likely into 2012," said Tom Porcelli, chief economist at RBC Capital Markets in New York.

But the smaller-than-expected decline in sales was yet another indication that the economy was set to regain momentum in the second half of the year.

U.S. stock indexes extended gains on the data, while government debt prices eased. The dollar was little changed.

The report came as policymakers at the Federal Reserve started a two-day meeting. Officials are expected to acknowledge the recent slowdown in economic activity, but they are likely to stick to their view that the soft patch is transitory.

The U.S. central bank is expected to confirm its $600 billion government bond-buying program will finish at the end of the month, as scheduled. The Fed, which has been criticized for risking inflation, has set the bar very high for any more monetary stimulus.

HOME PRICES FALL

In the 12 months to May, home resales were down 15.3 percent. The general weak housing market tone was underscored by the median home price, which at $166,500 was 4.6 percent lower than a year earlier.

The housing market is being squeezed by an overhang of unsold homes and a tide of foreclosures, which are depressing prices.

NAR chief economist Lawrence Yun said he believed sales had bottomed and expected pending contracts for May to rise by at least 15 percent. The pending homes sales report is due next week.

Foreclosures and short sales -- which typically occur at about 20 percent below market value -- accounted for 31 percent of transactions last month, down from 37 percent in April.

Cash purchases made up 30 percent of sales in May, while investors accounted for 19 percent of transactions.

Sales last month fell across the board, with multifamily dwellings declining 8.1 percent and single-family home units slipping 3.2 percent.

At May's weak sales pace, the supply of previously owned homes on the market rose to 9.3 months' worth from 9.0 months in April.

A supply of between six and seven months is generally considered ideal, with higher readings pointing to lower house prices.

(Editing by Andrea Ricci)

* Euro zone finance ministers said the Greek government had until July 3 to approve new steps to get the next installment of 110 billion euros in European Union and International Monetary Fund aid.

* The market expected a vote of confidence in Greek Prime Minister George Papandreou new cabinet to pass on Tuesday -- the first of three hurdles the government must clear to avert the euro zone's first sovereign debt default.

* S&P 500 futures gained 5.7 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures advanced 39 points, and Nasdaq 100 futures rose 8.25 points.

* The Federal Reserve Open Market Committee (FOMC) begins a two-day meeting later Tuesday. The Fed is expected to cut its growth forecast for 2011, but the central bank and its chairman, Ben Bernanke, will likely continue to argue the slowdown is temporary and the economy will pick in the second half of the year.

* U.S. home sales data for May is due at 10 a.m. EDT. Analysts in a Reuters survey expected sales to drop to about 4.8 million, compared with 5.05 million the month before.

* In company news, drugstore chain Walgreen Co (WAG.N) is expected to report quarterly earnings before the opening bell. Adobe Systems Inc (ADBE.O) is set to release results after the bell, with analysts looking for a 20 percent increase in earnings per share from 44 cents a year ago.

* Research In Motion Ltd (RIM.TO)(RIMM.O) lost a second marketing executive, and its shares dropped 7 percent Monday in the latest bit bad news that has cut the BlackBerry maker's market value in half this year.

* U.S. lawmakers working to rein in the country's rising debt said they will have to make substantial progress this week to ensure the country retains its top-notch credit rating.

* Rating agency Fitch said it would place the credit rating of the United States on watch negative if the debt ceiling is not raised by August 2, when the government has warned it may not be able to borrow more.

* On Monday, stocks erased early losses as the S&P 500 dipped toward 1,259.78, its 200-day moving average, which is often viewed as a pivotal point in determining market direction.

(Reporting by Angela Moon; editing by Jeffrey Benkoe)