Business Blog Posts

* The S&P index futures dipped as the euro fell to a session low versus the dollar. European stocks also turned negative, erasing gains on optimism that regional policymakers were closer to a deal. They meet again in Wednesday.

* The Federal Reserve Bank of Chicago releases its National Activity Index for September at 8:30 a.m. EDT. The index read -0.43 in August, indicating below-historical trend growth.

* S&P 500 futures fell 1.3 points and were slightly below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 2 points, while Nasdaq 100 futures rose 3.75 points.

* Texas Instruments Inc (TXN.N) will report third-quarter earnings later in the day. Investors want to see if there was any improvement in demand for its chips, used in everything from cars to cellphones, ahead of the holiday shopping season. Analysts expect a profit of about 57 cents per share, versus 71 cents a year ago.

* Diversified manufacturer Eaton Corp (ETN.N) and apparel maker VF Corp (VFC.N) reported results early Monday.

* Other companies due to report include Caterpillar Inc (CAT.N), Kimberly Clark Corp (KMB.N), Amgen Inc (AMGN.O), and Zions Bancorp (ZION.O).

* President Barack Obama will announce a series of actions this week to help the economy that will not require congressional approval, including a plan to make it easier for homeowners to refinance their mortgages, according to a White House official.

* U.S. companies do not plan to significantly increase payrolls over the next six months but neither will they aggressively fire workers, according to a survey suggesting lackluster job growth.

* Resource-related shares will be in focus, with key base metals prices jumping after data showed China's vast manufacturing sector picked up moderately in October, snapping a three-month contraction.

* Google Inc (GOOG.O) has spoken to at least two private equity firms about help in financing a deal to buy Yahoo Inc's (YHOO.O) core business, the Wall Street Journal reported over the weekend, citing a source.

* Netflix Inc (NFLX.O) said it will launch a subscription service in the United Kingdom and Ireland in early 2012.

(Reporting by Angela Moon; editing by Jeffrey Benkoe)

Futures for Euro STOXX 50, for Germany's DAX and for France's CAC were all us between 0.8 and 1 percent. Financial spreadbetters earlier predicted Britain's FTSE 100 .FTSE to open as much as 1.1 percent higher.

At a summit on Sunday, European Union leaders neared agreement on bank recapitalization and the use of European Financial Stability Facility (EFSF) to stave off a bond market contagion.

Sharp differences remain, however, over the size of losses that private holders of Greek government bonds will have to accept. Final decisions were deferred until a second summit on Wednesday.

But an indication of a modest pick-up in China's manufacturing sector, which snapped a three-month contraction, provided some relief to risky assets on Monday with Asian stocks outside Japan up 3.6 percent.

HSBC's flash Purchasing Managers' Index rose to 51.1 in October from September's final reading of 49.9, climbing above the 50-level that separates expansion from contraction for the first time since July.

Turnover remained light across Asian exchanges as traders await final details of a possible euro zone solution expected this week.

Asian credit spreads also tightened on hopes that European leaders will look beyond stop-gap measures and unveil a durable solution on Wednesday.

In Japan, the Nikkei .N225 closed up 1.9 percent with Olympus shares (7733.T) still dominating trading volumes as it plunged to its lowest level since 1998.

In the latest twist to the Olympus saga, which has now wiped off half of the company's market value, media reports suggest the U.S. Federal Bureau of Investigation was probing certain fees paid to advisors.

A strong yen, which rose to a record high against the dollar on Friday, is likely to cap gains and keep Japanese stocks trading in a range held since September, with last week's high of 8,911.7 as near-term resistance.

Japan's finance minister put traders on alert for possible currency intervention on Monday after the yen's rise to a record high threatened to further squeeze exporters' profits and hold back economic recovery.

Funds are still positioned defensively, strategists from Citigroup said in a note on Monday, with portfolio managers trimming positions in Southeast Asia and adding to defensive sectors such as telecoms.

If later this week there is better-than-expected GDP data from the U.S. as well as a credible solution to the euro zone's problems, funds could dip back into cyclicals and help sustain Monday's bounce in risky assets.

FIRMER EURO

The euro stayed supported, and reversed earlier losses against the dollar that came on the back of light profit-taking from macro players, as markets clung to hopes that European policymakers were moving closer to stemming the region's debt crisis.

The euro was trading at $1.3903 extending Friday's 0.8 percent move higher.

"It doesn't feel to me like we're going to see a big risk rally, but we could easily see this deal done, risk remains relatively well supported, especially if we start thinking of things like another Fed quantitative easing, that'll help keep market focused on a weaker U.S. dollar," said Greg Gibbs, strategist at RBS in Sydney.

Commodity currencies, usually sold off in times of market stress, also rose. The Australian dollar stood at $1.0411, up 0.8 percent versus New York's $1.0331 close on Friday.

In commodities markets, U.S. crude for December delivery rose 1 percent while spot gold rose 0.5 percent to $1649.29 an ounce.

Copper gained for a second straight session with the most active January copper contract on the Shanghai Futures exchange rising 5.1 percent to a high of 54,280 yuan ($8,502.51) a tonne shortly before its midday close.

(Additional reporting by Ian Chua in SYDNEY; Editing by Richard Borsuk)

"The dollar/yen rate fell sharply, to between 75 and 76 yen, in a short time. This is an utterly speculative move and not reflecting the economic fundamentals at all. This is regrettable," Azumi told reporters.

"If this move becomes excessive, we have to take decisive action. I already instructed my staff on Saturday to be prepared to take action."

He added that the strong yen would have a major impact on Japan's export sector, especially the auto industry, and could dent the country's economic recovery after the March 11 earthquake and tsunami.

He made the remarks after the dollar hit a record low of 75.78 yen on trading platform EBS on Friday. That surpassed its previous record low of 75.941 yen set in August, and brought back into focus the possibility of official intervention to weaken the Japanese currency.

The dollar has rebounded since then and rose slightly after Azumi's remark, standing around 76.40 yen on Monday.

Analysts do not rule out the chance of currency intervention, most likely unilateral, if yen rises continue.

"Japan may intervene in the currency market if dollar/yen stays below 76 or falls below 75. Unless it intervenes, the yen may continue to rise and verbal warnings alone may not be able to reverse that trend," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

(Writing by Leika Kihara; Editing by Edmund Klamann and Chris Gallagher)

The trigger would be a likely failure by Congress to agree on a credible long-term plan to cut the U.S. deficit, the bank said in a research note published on Friday.

A second downgrade -- either from Moody's or Fitch -- would follow Standard & Poor's downgrade in August on concerns about the government's budget deficit and rising debt burden. A second loss of the country's top credit rating would be an additional blow to the sluggish U.S. economy, Merrill said.

"The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan" to cut the deficit, Merrill's North American economist, Ethan Harris, wrote in the report.

"Hence, we expect at least one credit downgrade in late November or early December when the super committee crashes," he added.

The bipartisan congressional committee formed to address the deficit -- known as the "super committee" -- needs to break an impasse between Republicans and Democrats in order to reach a deal to reduce the U.S. deficit by at least $1.2 trillion by November 23.

If a majority of the 12-member committee fails to agree on a plan, $1.2 trillion in automatic spending cuts will be triggered, beginning in 2013.

Those automatic cuts, mostly in discretionary spending, would weigh further on a fragile U.S. economy, Merrill said. In the same report, the bank reduced its 2012 and 2013 growth forecasts for the United States to 1.8 percent and 1.4 percent, respectively.

If there were a downgrade, it was not clear which ratings agency would move first.

Moody's Investors Service, which has a negative outlook on the United States's Aaa rating, said it is looking at several other factors, including the results of presidential elections and the expiration of the Bush-era tax cuts late in 2012, to decide on the rating.

"It's not that we're waiting just for this committee to decide on the rating," Steven Hess, Moody's lead analyst for the United States, told Reuters in an interview last week.

Failure by the committee to come up with an agreement, he said, "would be negative information but it is not decisive in our view about the rating."

To be sure, Hess did not rule out the possibility of an early move on U.S. ratings if the country's economy slips into recession. So far, however, the economic performance "is certainly not super positive but not a disaster either," he said.

Fitch Ratings, on the other hand, still has a stable outlook on its AAA rating on the United States, meaning it is more likely to revise that outlook to negative before actually downgrading the rating.

In its latest report on the United States, Fitch says a "negative rating action," which could be only an outlook revision, could result from a weaker-than-expected economic recovery or by failure by the bipartisan committee to reach agreement on at least $1.2 billion in deficit-reduction measures.

(Editing by Leslie Adler)