Business Blog Posts

* Some caution was expected ahead of the conclusion of a Group of 20 meeting in South Korea, which is seeking to tackle economic imbalances and fend off the prospect of damaging currency devaluations.

* The dollar pared its losses on wariness over whether any clear agreement would be reached at the meeting, and the U.S. urged countries to avoid using their currencies to gain an economic advantage.

* U.S. corporate earnings in focus on Friday include Verizon Communications (VZ.N), which is expected to lose some ground for now to rival AT&T, the exclusive U.S. carrier of Apple's iPhone. Some analysts, however, are optimistic about the future amid speculation that the iPhone may finally come to Verizon customers next year.

* Other companies expected to report earnings include manufacturer Honeywell HON.L and oilfield service provider Schlumberger (SLB.N)

* In company news, AIA, the Asian life insurance arm of AIG (AIG.N), is set to raise $17.9 billion after pricing its Hong Kong IPO at the top of its range, as investors piled into a company with a wide footprint across rapidly growing Asia.

* Genzyme (GENZ.O) will meet investors in New York to argue its case for rejecting an $18.5 billion offer from French drugmaker Sanofi-Aventis (SASY.PA). The U.S. biotechnology company will provide a 2011 earnings forecast, which, if higher than analysts are expecting, could lead Sanofi to raise its bid.

* Wall Street edged higher late on in a choppy session on Thursday, buoyed by strong earnings but a firmer U.S. dollar limited gains.

* Shares in American Express (AXP.N) and SanDisk (SNDK.O) were among those to rise after the closing bell following the release of their earnings, while Baidu Corp (BIDU.O) slipped in extended trade after its results.

* On the economic front, two top Federal Reserve officials gave competing views on the need for more monetary stimulus to the U.S. economy, continuing a public debate over further easing even though the core view at the central bank appears to favor such a move.

* Growing speculation in recent weeks that the Fed will extend quantitative easing measures at its next meeting in November has put pressure on the dollar while boosting equities, but uncertainty over how much the central bank might inject into the economy has caused some choppiness in markets.

In Europe, the FTSEurofirst 300 .FTEU3 index of top shares was down 0.2 percent by 5:14 a.m. ET, with mining shares among the heaviest fallers.

(Reporting by Harpreet Bhal; Editing by Greg Mahlich)

G20 finance officials started their formal meetings on Friday with nations from the developing world and Japan dismissing the U.S. proposals which it says are aimed at defusing tensions that economists fear could trigger trade wars.

U.S. Treasury Secretary Timothy Geithner, in a letter to finance leaders that was seen by Reuters, said "countries with persistent surpluses should undertake structural, fiscal and exchange rate policies to boost domestic sources of growth."

In return, countries such as the United States that are running big budget and trade deficits would adopt "sustainable medium-term fiscal targets."

Geithner's overtures have already been rejected by countries as diverse as India and Japan and markets are skeptical of a universal deal that would address global economic imbalances and tackle attempts by many emerging economies and others to weaken their currencies.

While the G20 won praise for coordination of stimulus packages during the global financial crisis, its sense of unity has gradually evaporated in the face of strains resulting from unprecedented efforts to revive global growth.

"There is an action plan, but there is an awful lot of complaints, proposals," Russian finance official Andrey Bokarev said ahead of the meetings.

A financial source who met with Geithner in South Korea said that the U.S. official had asked countries to limit their current account surpluses or deficits to 4 percent of gross domestic product, something that few G20 members felt able to accept.

China, India, Saudi Arabia and Russia are all running substantial surpluses while the U.S. is in deficit.

"We need to talk about it first, but numerical targets are unrealistic," Japanese Finance Minister Yoshihiko Noda said.

The issue of addressing "undervalued" currencies will also tax leaders, although Canadian policymakers said that China had agreed in principle to move toward more foreign exchange flexibility.

The U.S. dollar was down 0.27 percent against a basket of six major currencies, near a low for the year struck last Friday and currency strategists said there would be further weakness if the G20 disappointed.

CURRENCY ISSUE REMAINS UNANSWERED

Geithner's letter made no reference to the anticipated language of the final communiqué on foreign exchange arrangements.

He did state that G20 countries "should commit to refrain from exchange rate policies designed to achieve competitive advantage by either weakening their currency or preventing the appreciation of an undervalued currency."

The pricing of the IPO, set to be the world's third biggest, comes amid a boom of new listings in Asia and puts an end to a long-running saga for American International Group Inc

(AIG.N).

Its bid to sell AIA and use some of the proceeds to pay back part of a whopping $182.3 billion U.S. bailout it received during the financial crisis began two years ago and included two failed auction attempts and two floatation efforts.

AIA said on Friday the IPO was priced at HK$19.68 each and fully exercised the upsize option, confirming an earlier Reuters report. If the underwriters exercise the overallotment option, the IPO size will rise by 15 percent to $20.5 billion. AIA's trading debut is set for October 29.

"Investors did not dare to miss this jumbo deal, as the market has ample liquidity and the sentiment is very strong," said Antonny Cheng, a fund manager at Gain Asset Management Ltd.

AIA has been in the Asian region for more than 90 years and operates in 15 markets, with forecast pre-tax operating profit of $2 billion.

Life insurance premiums in Asia-Pacific are forecast to grow at a compound annual clip of 12.3 percent between 2009-2014, Sigma Swiss Re estimates, compared with flat to modest growth in other parts of the world.

Still, the company faces a tough challenge with expanding in China, where the mainland's top industry players dominate and more foreign competitors are flooding the market.

The IPO will value AIA at $30.5 billion at the top end, with AIG holding a 41.6 percent stake that will drop to 33 percent if the green-shoe option is exercised in full.

"It's more or less fully valued after the shares were sold at the top end," said Francis Lun, general manager with Fulbright Securities. "Still one could expect a 5 percent upside on debut."

AIA sold 5.86 billion secondary shares and exercised the upsize option to sell an additional 1.17 billion secondary shares due to strong demand from investors.

Unlike many other foreign insurers, AIA has 100 percent ownership of its entities in China, Indonesia, Malaysia, Thailand and Vietnam. AIA has more than 300,000 agents in Asia.

"This is a cost effective way for IPO investors to ride China's growth," said Francis Gaskins, president of IPOdesktop.com in Marina del Rey, California.

Asian IPOs raised $90 billion in the first three quarters, more than double the combined total from the United States, Europe, the Middle East and Africa, according to Thomson Reuters.

Laying out his agenda for this weekend's G20 meetings in South Korea , Geithner said in a Wall Street Journal interview he would seek numerical targets for "sustainable" trade surpluses and deficits as a way to help rebalance the global economy.

He is hoping that by persuading major emerging and advanced economies to cooperate on foreign exchange policies, he can coax China into allowing the value of its yuan to rise further.

"Right now, there is no established sense of what's fair," Geithner told the Journal.

"We would like countries to move toward a set of norms on exchange rate policy," he added.

Geithner also sought to provide some reassurances that the United States is not deliberately trying to devalue its dollar.

The Journal said that in the interview he suggested that he saw little reason for the dollar to sink further against the euro and the yen, saying that these "major currencies" were "roughly in alignment now."

The comments briefly lifted the dollar in Asian trade, pushing it up to 81.84 yen from about 81 yen. It settled back down to 81.15, near a 15-year low.

Geithner on Monday in California vowed that the United States would not engage in dollar devaluation, saying "No country around the world can devalue its way to prosperity."

CURRENCY TAKES CENTER STAGE

While past G20 meetings avoided direct confrontation on thorny exchange rate issues, the meetings starting on Friday in Gyeongju are expected to address the problem head-on. The dollar's protracted slide and China's tightly controlled trading band for the yuan have put upward pressure on other emerging market currencies that are allowed to move more freely.

Actions by several countries, including Brazil this week, to stem the rise of their currencies and protect their exporters, has fueled talk of a "currency war."

While some criticism has been leveled at U.S. Federal Reserve monetary easing for weakening the dollar, U.S. officials point to China's determination to prevent its yuan from rising as the main source of tensions.

"When large economies with undervalued exchange rates act to keep their currencies from appreciating, that compels other countries to do the same, setting off a dynamic of competitive nonappreciation," a senior Treasury official told a news briefing on Wednesday, referring to China.

Geithner repeated his view that China's yuan is significantly undervalued, but if the pace of appreciation since September were sustained, it would correct the undervaluation over time.

In an interview published in the Wall Street Journal on Thursday, Geithner suggested that he saw no need for the dollar to sink further against the euro and the yen, causing the dollar to spike half a yen and climb rapidly against the euro.

The dollar rose as far as 81.84 yen from about 81.00 yen before Geithner's comments came out while the euro fell 0.6 percent in a matter of minutes as the market, taking the comments to imply that the dollar did not need to fall further, covered dollar short positions.

By late morning, however, it pared some of its early gains, and the dollar index .DXY against a basket of major currencies was up 0.2 percent.

The drop in the yen, which is still near 15-year highs against the U.S. currency, briefly pulled Japan's benchmark Nikkei .N225 out of negative territory before slipping back 0.3 percent.

"The Nikkei rebounded strongly after the dollar jumped against the yen on Geithner's comments," said Takashi Ohba, senior strategist at Okasan Securities.

"This could have prompted active short-covering by foreign players who were detected selling Nikkei futures heavily the previous day."

The MSCI index of Asia shares outside of Japan also weakened slightly, shrugging off overnight gains on Wall Street as traders took profits after a strong run-up in September and early October.

Talk of competitive currency depreciation has flared ahead of a G20 finance ministers meeting this week and a G20 summit next month, as developed countries keep monetary policy extremely easy to shore up sluggish growth and as capital flows in search of better yields push up currencies in faster growing emerging economies.

"It's become a bit difficult to test the dollar's downside for now," said Katsunori Kitakura, chief dealer at Chuo Mitsui Trust Bank.

"It seems as if the G7 has formed a united front ahead of the G20 meeting, as he's saying he's mainly focusing on emerging economies when it comes to currencies."

CHINA GROWTH COOLS A BIT BUT STILL ROBUST

The Shanghai stock market .SSEC briefly turned positive after data showed China's economic growth ebbed in the third quarter and inflation edged just a touch higher. But Shanghai quickly surrendered the gains and was down 1.3 percent by midday, helping pull Hong Kong shares .HSI lower.

The Chinese data was broadly in line with forecasts, suggesting that a surprise interest rate rise from this week may be enough for now, but markets remain wary of further policy tightening by the central bank.

Economic growth slowed to 9.6 percent in the third quarter from a year earlier, down from 10.3 percent in the second quarter. Analysts had expected a 9.5 percent pace.