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WASHINGTON (Reuters) � Johnson & Johnson's massive recall of faulty medicines, including a quiet buyback of its Motrin painkiller, has angered U.S. lawmakers who will question the company's chief executive and a senior health regulator on Thursday.

J&J has recalled millions of bottles of potentially contaminated over-the-counter medicines such as Children's Tylenol and Benadryl, forcing one of its plants to shut down well into next year, and prompting a criminal probe and civil lawsuits.

The House of Representatives Oversight and Government Reform Committee called the hearing after a session in May that some members said just raised more questions.

"During the course of its investigation, the Committee has been concerned about the inconsistencies that it has uncovered," Democratic staffers on the panel said in a memo released ahead of the hearing.

J&J CEO William Weldon plans to say his company "let the public down," according to written testimony released on Wednesday.

He is announcing $100 million to improve facilities and operations and said at least one recalled product would be back on the market next week.

In April, J&J's McNeil consumer unit recalled 40 children's and infant products -- affecting 135 million bottles -- after Food and Drug Administration inspectors found filthy equipment and contaminated ingredients at a Pennsylvania factory.

Company and FDA officials say there have been no reported injuries from the recalled products.

Other witnesses at the hearing include FDA Deputy Commissioner Joshua Sharfstein and Colleen Goggins, the head of the McNeil unit, who is due to leave March 1.

Weldon has not announced any plans to retire but the recalls have tarnished J&J's reputation with consumers and marred his largely successful eight years at the helm.

MOTRIN RECALL

In probing the April recall of children's medicines, the committee discovered that J&J hired outside contractors in 2009 to buy packages of adult Motrin sold at convenience stores that had dissolving problems.

Lawmakers want to determine if the FDA knew about the stealth recall as J&J asserts. The FDA denies it approved the company's action.

FDA's Sharfstein plans to acknowledge that, overall, the recall was hampered by delays on all sides.

While FDA knew about some of McNeil's plans, the company "did not fully disclose the likely scale of the action or the way that the company was intending to proceed," according to Sharfstein's written testimony.

An e-mail released by the committee shows an employee for one contractor knew the buyback could be viewed negatively.

Pulling specific faulty lots "will take time and may draw suspicion to what we are doing," an employee for Inmar Inc told McNeil managers. "Some stores will not care, others will ask specifically what we are doing."

Darrell Issa, the committee's senior Republican, has questioned the FDA's handling of the situation and has asked the Department of Health and Human Services to investigate.

"There are growing concerns surrounding the relationship between the FDA and McNeil," he said.

FDA's Sharfstein said the incident highlights FDA's reliance on voluntary company actions and the need for greater agency power to demand recalls, something Committee Chairman Edolphus Towns is pushing through legislation.

Despite the recalls, shares of J&J, a huge diversified healthcare company, have largely tracked the broader market.

Chief Financial Officer Dominic Caruso told investors in July that the recalls cut quarterly sales by $200 million, or about 5 cents per share.

(Editing by Tim Dobbyn and Muralikumar Anantharaman)

HONG KONG (Reuters) � The dollar was stuck near an eight-month low on Thursday, ground down by expectations of more Federal Reserve easing, while Asian stocks pulled back slightly from a two-year high as markets took a breather from September's strong rally.

The dollar (.DXY) is down 8.5 percent this quarter against a basket of world currencies, its worst quarter in over eight years, as a sluggish economy and stubbornly high unemployment levels have fueled expectations of another round of asset buying by the Fed.

Asian stocks ex-Japan fell 0.4 percent but were set for their best quarter in a year as investors poured money into regional markets on the back of robust economic growth driven by China.

The MSCI index of Asia Pacfic stocks outside Japan (.MIAPJ0000PUS) has gained over 17 percent this quarter, easily outperforming developed markets with the S&P 500 (.SPX) up 11 percent and European shares (.FTEU3) up 7.2 percent.

For the year to date, the ex-Japan index is up around 7 percent.

Japan's Nikkei (.N225) fell 0.7 percent after U.S. stocks closed lower, but was set for its best monthly performance in six, helped by expectations that further easing would curb the yen's strength.

Mounting speculation that the Bank of Japan was preparing to ease monetary policy again and that it could take action at its meeting next Tuesday was keeping the yen's gains in check.

Traders also remained wary of any further intervention by Tokyo to weaken its currency, as the dollar struggled against the yen.

By late morning it was at 83.80 yen, just above a 15-year low set just before Japan intervened to sell the yen on September 15.

"The big turning point in September was intervention. The move has helped to soothe fears about a further advance in the yen and put the stock market back on a recovery path," said Masayuki Otani, chief market analyst at Securities Japan, Inc.

"Neither the United States nor Japan has changed their stance toward easing policy, and that will likely support the market. The domestic economy is seen slowing from now on, but a sharp slowdown is unlikely and stock prices will likely move to factor that in advance and build on gains."

Japanese government bonds dipped on profit taking after the previous day's rally, although weak industrial output data further clouded Japan's economic outlook and helped to curb losses.

Gold ticked lower but held within sight of a record high hit in the previous session, underpinned by continued U.S. dollar weakness. Spot gold eased $1.80 to $1,307 by 10 p.m. ET.

(Additional reporting by Charlotte Cooper and Masayuki Kitano in Tokyo)

(Editing by Kim Coghill)

WASHINGTON (Reuters) � Elizabeth Warren, the Obama administration's new consumer financial czar, offered an olive branch to the largest U.S. banks on Wednesday, saying she wanted their help in developing a principles-based approach to rulemaking.

Warren told the Financial Services Roundtable that the new Consumer Financial Protection Bureau she is setting up does not intend to layer on complex new rules that add compliance costs and encourage avoidance by banks.

"Instead of creating a regulatory thicket of 'thou shalt nots,' and instead of using ever more complex disclosures that drive up costs for lenders and provide little help for consumers, let's measure our success with simple questions," Warren said in remarks prepared for delivery to the banking trade group.

She said these should include whether customers can understand financial products, figure out their costs and risks and compare products in the marketplace.

Among her first tasks in launching the new agency is to develop a new, simplified disclosure form for credit cards. She said an average consumer should be able to read the form in about four minutes, with 90 percent comprehension and "understand the deal."

Created by landmark financial reform legislation enacted in July, the new agency will take over consumer protection functions from several existing regulatory agencies.

Warren reiterated that she's not interested in dictating costs, terms or product features -- that's up to the marketplace, but for the market to function properly, information needs to be transparent.

"I come to Washington as a genuine believer in markets and a genuine believer that the purpose of regulating the consumer credit market is to make that market work for buyers and sellers alike: a level playing field where the best products at the best prices win," she told the group, which represents the 150 largest U.S. integrated financial institutions..

Warren, a Harvard Law School professor and consumer advocate, was named a special adviser to President Barack Obama and Treasury Secretary Timothy Geithner on September 17 to set up the agency, much to the chagrin of Wall Street.

Long a fierce critic of deceptive mortgage and credit card lending practices, she has been criticized by many financial executives for what they see as a lack of practical banking experience and a predisposition that banks are guilty parties.

Since shifting from her previous role as bailout watchdog chairing the Congressional Oversight Panel, Warren has spent time mending fences with the financial industry.

Earlier on Wednesday, she told reporters that the traditional rulemaking approach would put smaller banks at a disadvantage because it would raise compliance costs and "locks in an adversarial relationship" between banks and their customers, letting the rules shape the products.

She said she wants credit cards and mortgages to be more like toasters or cell phones, where customers can easily compare the costs and benefits.

To do this, she said she wants to set goals and work with the industry to meet them through clear, simple rules that do not require much "fine print" or pages of legal disclaimers.

"Layering 10,000 rules is not going to turn this into a working relationship," she told reporters. "Maybe that's the way we have to go. This is the invitation to another approach, and I hope they will work with me."

(Reporting by David Lawder; Editing by Bernard Orr)