By Gopal Sharma

  KATHMANDU (Reuters) - About 2,000 foreign hikers have been trapped in bad weather on the slopes of a mountain near Mount Everest in a remote corner of Nepal for the past four days, officials said on Friday.

  They have been forced to stay in the small hill resort of Lukla, the gateway to Mount Everest, which has been covered by thick clouds this week, forcing airlines to cancel flights to and from the remote region.

  Lukla, which lies at a height of 2,800 metres (9,186 feet),

  is located 125 km (78 miles) northeast of the Nepali capital.

  Tens of thousands of trekkers and climbers visit the Solukhumbu region in northeast Nepal, home to Mount Everest, every year. Many start and end their trek from the windswept resort where a small airstrip is carved into the rugged mountainside.

  Utsav Raj Kharel, chief of Lukla's Tenzing Hillary Airport, said tourists, who were not in physical danger, had been waiting for their flights back to Kathmandu for the past four days.

  " Visibility is almost nil. Fog and clouds have covered the entire area making flights by fixed-wing small aircraft impossible," Kharel told Reuters by phone.

  Weather officials in Kathmandu said the clouds could continue to cover the region for a couple of days, worsening the plight of the trapped tourists who could face a food shortage.

  " Though a few small private helicopters had picked some tourists from nearby Sirke village, they are inadequate to clear the rush," Kharel said.

  Santa Subba, chief of the Himalayan Rescue Association Nepal, said authorities were expected to make arrangements to rescue the trapped hikers in big helicopters once the weather conditions allowed them to reach the area.

  Autumn, which runs from September to November, is peak tourist season in South Asia's poorest but scenic country, which gets nearly four percent of its gross domestic product from tourism.

(Reuters) - Here is a snapshot of the euro zone crisis as G20 leaders meet in Cannes. All times are GMT:

  * 1454 -- IMF head Christine Lagarde said that the International Monetary Fund would not lend to the European Financial Stabilization Fund (EFSF).

  * 1442 -- U.S. President Barack Obama says he is confident Europe has the capacity to meet euro zone debt crisis challenge.

  * 1431 -- Italian Prime Minister Silvio Berlusconi said he had a solid majority in parliament and saw no need for an interim " technical government."

  * 1408 -- Berlusconi said Italy had refused an offer of financial support from the IMF.

  * 1347 -- French President Nicolas Sarkozy says that there is no way the euro zone will be allowed to fall apart

  * 1218 -- German Chancellor Angela Merkel said it was positive the IMF would monitor Italy and its progress with economic reforms via quarterly reports.

  * 1215 -- The euro fell versus the dollar and German Bund futures rose after Merkel said hardly any countries in the G20 have said they will participate in the European Financial Stability Facility (EFSF).

  * 1212 -- Merkel said she wants to ensure that the IMF has sufficient resources.

  * 1209 -- European Central Bank policymaker Juergen Stark said the Euro is a stable currency

  * 1123 -- Greece said it had dropped its plans to hold a controversial referendum on the country's euro zone membership.

  * 1036 -- The European Central Bank's decision to cut interest rates does not reflect a strategic shift towards pragmatism, European Central Bank policymaker Juergen Stark said.

  * 0705 -- Italy has agreed to have the IMF and the EU monitor its progress in meeting targets on pension, labour and structural reforms that were agreed with EU leaders last week, a senior EU source said.

By Luke Baker and Giselda Vagnoni

  CANNES, France (Reuters) - On the surface it was the same old Silvio Berlusconi who arrived at the G20 summit in Cannes -- beaming for the cameras as he stepped from his limousine, an overcoat hanging theatrically from his shoulders, a confident hand raised.

  Photographers captured the 75-year-old billionaire, whose private life makes headlines, appraising Argentine President Cristina Fernandez de Kirchner from behind with a smile.

  But underneath, the ground was shifting dramatically for the prime minister as his European allies pressed him to accept much tighter oversight of his planned economic reforms, not just from the European Commission, but the IMF too.

  It wasn't quite a case of the euro zone's third largest economy being pushed into IMF protection, but it came close, with the leaders of France, Germany and European institutions telling Berlusconi that if he wanted to restore credibility and win back market confidence, the IMF had to be involved.

  The alternative might be Italy, with debts of 1.9 trillion euros (862 billion pounds), or 120 percent of GDP, following Greece down the path towards a financial bailout, perpetuating a debt crisis that threatens to tear the European single currency apart.

  " In the general climate, with the lack of credibility the Italian government has, every mistake is punished on the spot," said a diplomat who participated in late-night talks with Berlusconi on Thursday, a meeting also attended by U.S. President Barack Obama and the IMF's Christine Lagarde.

  " That's why very close monitoring is absolutely key, absolutely key... It took some discussion because some of the participants wanted to go even further than that, but the Italians, they can live with IMF surveillance."

  'DREAMS COME TRUE'

  There was initial and perhaps understandable reluctance from Italian authorities to accept such a move, which means a top eight economy being submitted to an intensive IMF health check every quarter, but ultimately it was accepted.

  " Italy has decided on its own, on its own initiative, to ask the IMF to monitor implementation of its commitments," European Commission President Jose Manuel Barroso told a packed news conference in Cannes.

  " I see this as evidence of how important Italy's reform process is for the country and for the euro zone as a whole."

  That may be true, but it also represents a serious political blow for the Italian leader, who for years has promised to take determined steps to overhaul the economy's moribund pension system and labour market, only to fail.

  With his political future in doubt, with former allies abandoning his coalition and the passage of legislation now almost exclusively riding on confidence votes, he had to sacrifice a degree of sovereignty to retain wider credibility.

  Addressing a news conference shortly after Barroso spoke, Berlusconi sounded a note of defiance, saying he did not believe his time in office was coming to an end and that he welcomed closer IMF oversight, brushing off the intrusiveness.

  " There is no limit to national sovereignty," he said.

  A senior European official who has worked closely with him in recent months said patience had effectively run out, with the prime minister's word no longer holding good in Europe.

  " He would say 'I've dreamed all my life of making these reforms to the economy, but it hasn't been possible because of the socialists and communists'," the official quoted Berlusconi as saying at one recent meeting, only to be told in reply:

  " Silvio, it's time to make your dreams come true."

  Berlusconi, who has managed to hold on to office despite multiple court cases involving his business affairs and private life, is a born political survivor. He may well retain power for longer, but he is unlikely to go on ignoring his obligations, EU sources said.

  " He's fully aware of the seriousness of the situation," said one diplomat involved in meetings with him. " And if he wasn't in the beginning, he's fully aware now."

  (Writing by Luke Baker editing by Janet McBride)

* Nonfarm employment in October rises 80,000

  * Private sector jobs up 104,000, govt down 24,000

  * Jobless rate edges down 9.0 pct from 9.1 pct in Sept

  * Average hourly earnings rise 5 cents (Adds details, analyst comments, updates markets)

  By Lucia Mutikani

  WASHINGTON, Nov 4 (Reuters) - U.S. hiring slowed in October but the unemployment rate hit a six-month low and job gains in the prior two months were stronger than previously thought, pointing to some improvement in the still-weak labor market.

  The employment report on Friday was the latest data to suggest the economy was gathering a bit of momentum and a further indication recession risks were fading.

  Nonfarm payrolls rose a tepid 80,000 last month, the Labor Department data showed, below economists' expectations for a gain of 95,000 and a slowdown from September.

  But employers added 102,000 more jobs than previously estimated in August and September, and the jobless rate edged down to 9 percent from 9.1 percent, taking the sting out of the report.

  " Hiring is not booming, but I don't think there is any sign of recession. The risk of the economy falling into a second recession over the next six to 12 months has been reduced, but we still have a very long way to go," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester Pennsylvania.

  The household survey, from which the unemployment rate is derived, showed strong job gains for a third straight month, more than offsetting an increase in labor force as more Americans resumed the hunt for work.

  For financial markets, the report was overshadowed by developments in Europe where rich nations appeared to back away from a plan to broaden a euro zone bailout fund. Stocks on Wall Street were down more than 1 percent in morning trade.

  Prices for U.S. Treasury debt rose and the dollar firmed across the board, tapping flight to quality bids.

  SLOW PROGRESS

  The labor market remains the Achilles heel of the U.S. recovery, and progress putting the 13.9 million unemployed Americans back to work remains painfully slow.

  The slight improvements in the labor market hinted at by Friday's report will likely do little to take the pressure off President Barack Obama, who faces a tough fight for re-election next year.

  However, they may be enough to keep the Federal Reserve on the sidelines as it considers whether the economy could benefit from a further quantitative easing of monetary policy.

  " The labor market data suggest that growth may be strengthening even as Europe may be slipping into recession," said John Ryding, chief economist at RDQ Economics in New York. " As impatient as the Fed may be, it will be difficult to round up a consensus for QE3 as long as the employment data are pointing to an improving economy."

  The U.S. central bank on Wednesday lowered its growth forecasts, raised projections for unemployment, and said it was considering additional mortgage debt purchases. Fed Chairman Ben Bernanke said officials were eyeing Europe warily.

  LACKLUSTER JOB GROWTH

  Even though the economy is in its second year of recovery, only about a quarter of the more than 8 million jobs lost during the recession have been recovered.

  The economy needs to expand at an annual rate of at least 2.5 percent over a sustained period and consistently add roughly 125,000 jobs a month to keep up with new people entering the workforce.

  The Obama administration has struggled to come up with policies to generate sufficient employment amid stiff opposition from Republicans over more spending.

  Bernanke took lawmakers to task on Wednesday. " It would be helpful if we could get assistance from some other parts of the government to work with us to help create more jobs," he said after a two-day Fed meeting.

  There are signs of progress. A broad measure of unemployment, which includes people who want to work but have given up looking for jobs and those working only part time for economic reasons, fell last month after scaling a nine-month high in September.

  The average duration of unemployment retreated from a record high of 40.5 weeks hit in September.

  Last month, private employers added 104,000 workers, more than offsetting a drop in government payrolls of 24,000. Public employment has fallen nearly every month this year as state and local governments grapple with budget constraints.

  In the private sector, job gains last month were almost across the board, though construction fell 10,000 after a surprise addition of 29,000 jobs in September.

  Manufacturing payrolls rose 5,000 after a slight decline in September. In the service sector, retail employment added to the prior month's gains.

  There were also gains in professional and business services, and temporary employment, which rose 15,000. Economists often look to temporary hiring as a harbinger of increased permanent employment.

  Hiring in the healthcare and social assistance sector, which has been boosted by the swelling ranks of retirees, rose 16,300. However, the gain was less than the prior months.

  The average workweek was steady at 34.3 hours and hourly earnings rose 5 cents. (Reporting by Lucia Mutikani Editing by Neil Stempleman)

(Reacsts, adds details, updates prices)

  * Shanghai copper stocks up, premiums down

  * PT Timah will continue tin ingot shipments

  * Investors worried over deterioration of funding conditions

  By Silvia Antonioli and Maytaal Angel

  LONDON, Nov 4 (Reuters) - Copper eased on Friday as demand prospects dimmed amid renewed doubt over Europe's bailout package, a crucial confidence vote in debt-ridden Greece, and a mixed U.S. job report that failed to offset the gloom over Europe.

  German Chancellor Angela Merkel said few countries in the Group of 20 leading economies had committed to participate in the EU bailout fund, renewing doubt over the fund's ability to safeguard struggling economies.

  Greek Prime Minister George Papandreou faces a knife-edge confidence vote later on Friday after calling off a referendum on an EU bailout plan that could have threatened Greece's euro zone membership.

  Benchmark copper on the London Metal Exchange traded at $7,861 a tonne at 1522 GMT, slightly down from a last bid of $7,910 on Thursday. The metal earlier hit a session high of $8,059.75 per tonne as concerns over a Greek debt default eased after Greece's move to call off the referendum.

  " Unfortunately the situation in Europe remains as clear as mud, everything is being unpicked regarding the bailout this week, its hard to impose policies to solve the difficulties, the problems remain protracted and difficult," said Natixis analyst Nic Brown.

  " Wider than that we should be looking at non-farm payrolls, the situation in the U.S. is not that bad. Inflation in the developing world is at last starting to subside... (but) for me the price action has everything to do with Europe."

  Data released earlier showed U.S. employment rose less than expected in October, but a drop in the jobless rate to a six-month low of 9.0 percent and upward revisions to prior months' job gains pointed to a strengthening labour market.

  But U.S. stocks, seen as a proxy for economic growth, fell as renewed doubt over Europe's rescue fund trumped the jobs data. The euro was down versus the dollar meanwhile, making dollar priced metals costly for European investors.

  " Concerns remain regarding the stability of the Greek government," RBC said in a note. " As exposure to sovereign debt remains a concern for some highly leveraged banks/trading houses, the markets are likely to be rife with rumours for the coming days unless the Europe mess is suddenly and magically fixed."

  A surprise interest rate cut from the European Central Bank on Thursday supported market sentiment although worries about a slowing economy escalated.

  New ECB President Mario Draghi said the euro zone could subside into a " mild recession" in the latter part of 2011.

 

 

 

  FRAGILE PROSPECTS

  Medium- and long-term prospects for copper remained intact, with strikes at some of the largest miners disrupting production in an already tight market and Chinese buyers expected to restock around the first quarter of next year, analysts said.

  The union at Peru's Cerro Verde mine, which produces 2 percent of the world's copper, said late on Thursday that it would attend talks brokered by the regional government on Friday but two legal procedures threatened to delay a resolution to a month-long strike.

  Also, Freeport McMoRan Copper & Gold's massive Grasberg mine in Indonesia is producing copper, gold and silver ore at only 5 percent of its full capacity.

  In the short-term though, the picture looks a bit more fragile.

  The premium of spot copper in Shanghai has fallen $20 to $30 a tonne over the past two weeks, after some Chinese consumers slowed restocking.

  China is the world largest consumer of copper and accounted for about 40 percent of global demand in 2010.

  Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 13.7 percent from last week after a significant decline the previous two weeks.

  Inventories of copper in warehouses monitored by the LME however, continued to fall and hit their lowest since late February at 417,850 tonnes.

  In other metals, tin traded at $22,100 a tonne from $22,000 at the close on Thursday.

  PT Timah , the world's largest integrated miner, will continue to make tin ingot shipments in contracts agreed before an industry group halted all Indonesian exports from October, the firm said on Friday.

  Helping tin, 25 smelters, including PT Timah, agreed this week to maintain a self-imposed tin ingot shipping ban until the end of December, as they look to support benchmark prices.

  Aluminium traded flat at $2,145 from $2,146 while zinc which is used in galvanizing changed hands at $1,948 from $1,970 at Thursday's close.

  Lead traded at $2,039 from $2,035 and nickel at $18,572 from $18,420. Metal Prices at 1524 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2009 Ytd Pct

* Global nuclear power share could fall to 7 pct in 2035

  * Oil prices seen $114/bbl in 2015, $212 in 2035

  * Gas prices revised down on unconventional gas glut

  * World power demand to grow 3.1 pct a year

  * Coal to remain biggest source for power generation (Ties up oil, power, coal stories, adds comments)

  By Henning Gloystein

  LONDON, Nov 4 (Reuters) - The Fukushima disaster could lead to a 15 percent fall in world nuclear power generation by 2035, while power demand at the same time could rise by 3.1 percent a year, according to a draft copy of the International Energy Agency's 2011 World Energy Outlook.

  Following the Japanese crisis, many countries put their nuclear power plans on hold or under review, and some, including Germany and Switzerland, opted out of the technology entirely.

  The draft, obtained by Reuters ahead of its release next week, said the IEA had developed a " Low Nuclear Case" that assesses possible implications for global energy balances of a much smaller role for nuclear power.

  The draft was dated July 2011, and the IEA is scheduled to release the report in London next Wednesday.

  " In the Low Nuclear Case, the total amount of nuclear power capacity falls from 393 gigawatt (GW) at the start of 2011 to 339 GW in 2035, compared with an increase to 638 GW in the New Policies Scenario," the report said, a drop of around 15 percent.

  The report's main scenario is the " New Policies" scenario.

  The Low Nuclear Case is not a forecast but " is intended to illustrate what a pessimistic view of the prospects for the nuclear power industry might entail" , the report said.

  " The share of nuclear power in total generation drops from 13 percent today to just 7 percent in 2035, with implications for energy security, fuel-mix diversity, spending on energy imports and energy-related CO2 emissions."

  The report said " the prospects for nuclear power are now much more uncertain than before the Fukushima nuclear accident" and that it had " greatly increased the uncertainty about the future role of nuclear power in meeting the world's energy needs" .

  The IEA report said the drop in nuclear generation caused a rise in oil- and gas-fired power generation equivalent to about 0.2 percent of global oil supplies and 0.4 percent of natural gas supplies.

  In its New Policies Scenario, the report said it expected world electricity demand to rise from 17,200 terawatt-hours (TWh) in 2009 to almost 31,500 TWh in 2035, an annual growth rate of 3.1 percent.

  It estimated total investment in the power sector between 2011 and 2035 at $16.8 trillion.

  " Renewable energy technologies, led by hydropower and wind, account for half of this additional capacity and 60 percent of the investment in power generation," the report said.

  The report said it expected non-hydro renewables to generate 16 percent of global electricity in 2035, up from 3 percent in 2009.

  " The IEA has adjusted the World Energy Outlook over the past decade in 'mini steps' towards more and more renewable energy deployment," said Sven Teske, a senior energy expert at Greenpeace International.

  " We are still missing a real change away from false solutions such as nuclear power and carbon capture and storage towards a mix of renewable energy and energy efficiency," he added.

 

  OIL FORECAST UP, GAS DOWN

  The draft also said the jump in oil prices in the past year was adding to doubts about near-term economic prospects. Brent crude < LCOc1> has risen to around $111 a barrel from around $82 at end-September 2010.

  The draft assumed nominal oil prices of $114 a barrel in 2015 and $212 in 2035. Last year's report assumed prices of $104 and $204 by those dates. [ID: nL6E7M42HF]

  As for natural gas, the report the IEA expected prices to drop in the long term.

  " Our natural gas price assumptions have been revised downwards because of improved prospects for the commercial production of unconventional gas resources," the IEA said.

  In its New Policies Scenario, the report said it expected natural gas prices to reach $12 per million British thermal units (MBtu) in Europe, $14 per MBtu in the Pacific and $9 per MBtu in North America by 2035.

  This compares with 13.3 MBtu, 15.3 MBtu and $10.4 MBtu, respectively, in the IEA's previous price outlook for 2035.

  Financial analysts shared the IEA's view that new unconventional gas resources would cause gas prices to fall.

  " The recent acceleration of discoveries and evaluation of large existing reserves of unconventional gas in countries like China is changing the cost outlook," said Emmanuel Fages, an analyst at Societe Generale.

  But he added, " The real question is at what price this gas will be marketed, as contractual frameworks lead to a high price for producers on international markets."

  Most gas is supplied via oil-indexed, long-term contracts, and the strength of oil prices is preventing gas prices from dropping despite rising resources.

  " In this respect coal remains a cheaper alternative and might actually surprise by keeping a much larger share of generation than what was expected some years ago," Fages said.

 

  MODEST COAL, CO2 RISES

  The report said that while coal's share in global power generation could drop by 8 percent to 33 percent, it would remain the largest source of electricity.

  The share of natural gas power generation was expected to remain constant around 22 percent.

  International steam coal prices could rise modestly to $110 a tonne by 2035 from $99 in 2010, according to the report's key scenario.

  That forecast increase is less in percentage terms than for oil or gas because coal production costs are expected to remain low, and demand is seen flattening out by 2020, the IEA said.

  Prices for carbon allowances within the European Union were expected to rise to $31 a tonne by 2020, to $41 in 2030, and to $46 per tonne by 2035, the report said.

  " CO2 emissions in the power sector increase by over one-fifth between 2009 and 2035, growing more slowly than demand as a result of increased use of low-carbon energy sources and improved plant efficiency."

  Under the New Policies Scenario, Australian and New Zealand carbon prices would rise from $30 a tonne in 2020 to $42 in 2030 and to $48 a tonne in 2035.

  Korean carbon prices would rise from $18 a tonne in 2020 to $36 in 2030 and $45 in 2035, while Chinese prices would rise from $10 to $23 to $30 a tonne.

  The IEA's full WEO 2011 outlook report is due to be published on Wednesday, Nov. 9.

  (additional reporting by Alex Lawler and Jacqueline Cowhig, editing by Jane Baird)

* Grains ease on lower equities, firm dollar

  * Corn, wheat headed for first weekly decline in a month

  * Forecast for showers in U.S. Plains also weighs on wheat

  * Coming up: USDA November crop report on Wednesday (Recasts to include open of U.S. trading, adds new quotes)

  By Michael Hirtzer

  CHICAGO, Nov 4 (Reuters) - U.S. grain futures fell more than 1 percent on Friday as fresh doubts emerged over Europe's bailout package and traders evened positions ahead of a monthly U.S. government crop supply-demand report next week.

  Jitters before a key vote in Greece over the fate of the country's prime minister also weighed on other commodities markets, with oil and gold heading lower.

  Grains were also pressured by a firm dollar, which climbed after government data showed U.S. unemployment at its lowest level in six months.

  Corn and wheat futures were on track for their first weekly decline in a month while soybean futures were headed for their first weekly loss in two weeks.

  Futures for each contract have traded in a narrow range for the past several weeks and some investors are reluctant to take new positions until the U.S. Agriculture Department updates its supply and demand forecast in a monthly report due Wednesday.

  " We are close to the weekend and there is so much uncertainty in the outside markets that traders are going to be cautious," said Jefferies Bache analyst Shawn McCambridge.

  " We are hoping for a little more clarity next week (in the crop report) and we are close enough that no one is going to change positions," McCambridge said.

  Wheat futures led the way down at the Chicago Board of Trade, with benchmark December wheat declining 1.1 percent, or 7-1/2 cents, to $6.28-1/2 per bushel. CBOT December corn fell 4-1/2 cents to $6.49.

  Soybeans for November delivery eased 2-1/4 cents to $12.17 per bushel after posting their biggest daily gain in three weeks on Thursday.

  Wheat was further pressured by forecasts for precipitation in the drought-stricken southern U.S. Plains, where the hard red winter wheat crop is developing.

  Showers in parts of the Plains will help buoy wheat prospects, while wet weather over the next week to 10 days will slow the remaining harvest of the U.S. corn and soybean crops, an agricultural meteorologist said. (Additional reporting by Naveen Thukral in Singapore and Svetlana Kovalyova in Milan editing by Jim Marshall)

HONG KONG, Nov 4 (Reuters) - Hong Kong shares rebounded on Friday, recovering almost all of this week's decline on sustained strength in locally listed mainland Chinese companies and led by a 7.3 percent jump in top insurer China Life Insurance Co Ltd .

  The Hang Seng Index ended the day up 3.12 percent at 19,842.79, bringing its loss for the week to 0.88 percent. At its lowest point on Wednesday the index was down nearly 5 percent.

  The Hong Kong market was helped by strength in locally listed mainland companies. The China Enteprises index rose 3.99 percent on the day, finishing the week up 0.8 percent.

  On the mainland, the Shanghai Composite Index closed up 0.81 percent at 2,528.29, a two-month high.

 

  HIGHLIGHTS:

  * Oil producers rallied on a report in the China Securities Journal that said the country's oil companies may be allowed to adjust refined oil product prices by themselves in line with a government-set pricing formula.

  China Petroleum & Chemical Corp (Sinopec) , Asia's top refiner, jumped 8.3 percent. PetroChina Co Ltd rose 3.9 percent in Hong Kong.

  * Businesses most sensitive to China's domestic stock markets, such as insurers that hold shares in investment portfolios, and brokerages, staged a strong rebound this week. China Life posted a 12.8 percent rise this week. China Life's Hong Kong-listed shares are up 32.6 percent in the past month. Following the lead of their larger rival, Ping An Insurance (Group) Co of China Ltd ended the week up 5.5 percent while rival China Pacific Insurance (Group) Co Ltd rose 6.7 percent on the week.

  * Optimism about a rally in Shanghai heading into year-end saw another session of gains amid strong volume for the major China-related ETF in Hong Kong. The iShares A50 China Tracker rose 1.7 percent on healthy volume.

  One cause of concern, however, was that premium of the ETF unit's price to net asset value per share rose for a third successive session, hitting nearly 9 percent, the highest since early August and suggesting they were becoming expensive relative to the value of the underlying shares. (Reporting by Vikram Subhedar Editing by Chris Lewis)

NEW YORK, Nov 4 (Reuters) - The dollar rose more than 1 percent versus the Swiss franc and touched session highs versus the euro on Friday as investors took off risky bets on the table amid continued uncertainty in Greece.

  U.S. stocks were also sharply lower in early trading, while Treasuries were higher in price.

  The dollar last traded up 1.2 percent vs the franc at 0.88962, while the euro fell to session lows at $1.37160 and last changed hands at $1.37350, down 0.6 percent.

By David Milliken

  LONDON, Nov 4 (Reuters) - If the dark clouds hanging over Britain's growth prospects for the coming year have a silver lining, it is that they might finally help the Bank of England get inflation back to its 2 percent target for the first time since late 2009.

  Even economists who are typically unimpressed by the BoE's inflation-fighting prowess believe dismal growth over the coming year -- combined with the reversal of one-off effects currently raising prices -- will cause inflation to tumble from its current three-year high of 5.2 percent.

  However, the fact that the economy has to be on the brink of recession before inflation returns to target does little to ease their longer term worries about the competitiveness of British business and strong underlying price pressures.

  " We've all been surprised by how sticky UK inflation has been ... and people are right to be cautious that this will continue to be its main characteristic. What stops me getting too hawkish is simply that I have very weak GDP projections," said Ross Walker, an economist at Royal Bank of Scotland.

  Economists polled by Reuters last month, just after the BoE restarted its quantitative easing programme to boost the economy, saw growth of only 1.3 percent for 2012, compared to 1.0 percent this year -- less than half Britain's pre-crisis trend rate of growth. Inflation for the fourth quarter of 2012 is seen at 2.1 percent.

  The prospect of sharply falling inflation was a precondition for the BoE to start its second round of QE, and BoE deputy governor Charlie Bean said on Thursday that without the extra stimulus, inflation would be well below target in a couple of years.

  That said, weak growth and recession over the past three years has not led to as much downward pressure on prices as some BoE policymakers and private sector economists expected.

  " Britain looks like an oligopolistic economy," said Walker. " We have 5-6 big utility providers, 4-5 big banks, 4 big supermarkets. It's not that there isn't competition -- there is some -- but markets tend to be dominated by a small number of large players. That seems to influence pricing behaviour."

  How much this actually influences pricing is hard to assess, however. For example, energy regulator Ofgem said in a recent report that " energy companies were failing consumers by stifling competition through a combination of tariff complexity, poor supplier behaviour and lack of transparency."

  But although the cheapest gas supplier charged about 10 percent less than the average price paid by consumers, this difference is dwarfed by the 40 percent rise in overall gas prices over the past year.

  Similarly, retail analysts did not believe that supermarkets could easily raise prices without consumers going to competitors, and said firms found it easier to preserve margins by putting pressure on suppliers or promoting own-label goods.

  " Retailers have had to raise their prices to a degree because they've had nowhere else to go," said Richard Hyman, a strategic advisor to the consumer business practice at consultants Deloitte. " But if you were to apportion it in percentage terms, I think retailers in the whole of the inflation game would be bit-part players," he added.

 

  GLOBAL PRICE PRESSURES

  The one issue where macroeconomists and company analysts did agree was that British inflation was increasingly driven by global rather than domestic trends.

  This increases the amount of slack in the economy -- idle businesses and unemployed workers -- needed to push down inflation by a given amount, and makes it increasingly hard for the BoE to control inflation without having a disproportionate effect on the domestic economy.

  " The UK doesn't produce the range of consumer goods that consumers actually demand, so with the need to import those you are naturally exposed to global inflationary pressures," said Nomura economist Philip Rush. " The risks around that are to the upside, with emerging market growth much stronger than we can dream of in the UK."

  And while most economists expect oil prices to remain flat for the immediate future due to a weak global growth outlook, in the longer term there is strong upward pressure on energy prices from emerging market demand.

  However, in the short term the BoE does have some powerful arguments when it predicts that inflation will fall rapidly, and is likely to broadly stick with its August forecast that inflation will fall to 2.0 percent by the fourth quarter of 2012 when it updates its Inflation Report later this month.

  As the BoE regularly points out to critics, much of the year-on-year rise in prices to date has been due to January's sharp increase in sales tax, as well as a 70 percent rise in oil prices in the six months to May, which has steadily fed into household energy bills as utilities put up prices.

  Once these factors start to drop out of annual inflation figures next year, this should knock 2.5 percentage points off the headline inflation rate, according to an estimate from BoE policymaker Adam Posen last week.

  Few economists significantly dispute this figure, but other things being equal, it would still leave inflation nearer three percent than two. Instead, where the real debate lies is in how much of a downward push will be given to inflation by weak growth, or even recession.

  " The BoE is relying on large amounts of excess capacity to increase competitive pressures in firms and drive down prices. That is basic economics and should have an effect, but we don't think it is going to be quite as dominant as the MPC seem to assume," said Nomura's Rush.

  And those economists who do see a big fall in inflation -- such as Brian Hilliard of Societe Generale -- base their projections on a big rise in unemployment.

  " There will be a steady increase in unemployment and that will help get unit labour costs down," he said, predicting a rise in unemployment to 9 percent of the workforce from its current level of 8.1 percent. (Additional reporting by Mark Potter Editing by Toby Chopra)

CANNES, France, Nov 4 (Reuters) - Following is an alphabetical list of the 29 global systemically important financial institutions (G-SIFIs) released by the Financial Stability Board (FSB) on Friday:

  Bank of America Bank of China Bank of New York Mellon Banque Populaire CdE Barclays BNP Paribas Citigroup Commerzbank Credit Suisse Deutsche Bank < DBKGn.DE> Dexia Goldman Sachs Group Crédit Agricole HSBC ING Bank JP Morgan Chase Lloyds Banking Group Mitsubishi UFJ FG Mizuho FG Morgan Stanley Nordea Royal Bank of Scotland Santander Société Générale State Street Sumitomo Mitsui FG UBS Unicredit Group Wells Fargo (Reporting By Daniel Flynn)

SHANGHAI, Nov 4 (Reuters) - China stocks ended up 0.8 percent on Friday and 2.2 percent for the week, supported by expectations the government was prepared to fine-tune macroeconomic policies as economic growth slows and by ample liquidity in the financial system.

  The Shanghai Composite Index ended at 2,528.3 points, the highest level since early September. The index rose 0.2 percent on Thursday. (Reporting by Chen Yixin and Jacqueline Wong)

* Deadline looms, brokers and clients in frantic dash

  * New brokers sign up customers, margin clerks calculate

  * Markets muted, no sign yet of broad liquidation

  CHICAGO/NEW YORK, Nov 4 (Reuters) - Rival commodity brokers raced to bring on board thousands of MF Global customers on Friday, facing a tight deadline to see that trading positions and collateral frozen since Monday are fully margined or liquidated.

  Following a court order on Wednesday, the MF Global trustee has worked with the CME Group and a handful of other mostly independent futures commission merchants (FCMs) to move the bankrupt broker's 50,000 or so commodity accounts in bulk to new clearing firms, along with 60 percent of collateral.

  Facing a Friday evening deadline to transfer their accounts or have them closed out, customers have scrambled to ensure they have a new clearing broker. FCMs have jostled to get a piece of the business without being saddled by unknown new customers that may be more trouble than they are worth.

  So far there was little sign of the mass liquidation that analysts fear may ensue as traders rush to raise some $1 billion in additional margin with new brokers, the approximate sum that is being left on account at MF Global as authorities search for missing customer funds.

  But with margins due only on Friday evening, forcible liquidation occurring on Monday morning, and thousands of accounts still unsettled, dealers were jittery.

  " Some of them have moved," an MF Global broker told Reuters. " I am still waiting for word (on 300 accounts)."

  Initially, the CME anticipated that many of MF Global's segregated client accounts totaling some $5.5 billion would be transferred to one of six FCMs, according to a letter to the Commodity Futures Trading Commission: ABN Amro Chicago Clearing, ADM Investor Services, Dorman Trading, FCStone, RJ. O'Brien, and/or Rosenthal Collins Group.

  But several other brokers have worked to get in on the action. While the specifics remain in flux, the bankruptcy judge on Thursday rejected one request by a fund to move its accounts to a specific broker who was not on the original list, although the first order appears to allow clients to transfer positions, but not collateral, to a broker of their choosing.

  Penson Futures was garnering some clients, a source familiar with the transfer process said. It was not immediately clear how accounts would be divided.

  While regulators continue to search for the $633 million that authorities say may have been misappropriated from MF Global's segregated client accounts, which are supposed to be untouchable, the chief executive of the biggest independent FCM in the United States resigned.

  Jon Corzine, 64, former New Jersey governor and chief of Goldman Sachs & Co, stepped down as MF Global CEO four days since the firm filed for bankruptcy after its leveraged $6.3 billion bet on euro zone debt scared away clients and counterparties. (Writing by Jonathan Leff, reporting by K.T. Arasu in Chicago and Marcy Nicholson in New York Editing by Dale Hudson)

By Rodrigo Campos

  NEW YORK (Reuters) - U.S. stocks fell in morning trading on Friday after two days of steep gains as richer nations appeared to back away from a European Union plan to broaden funding for a euro zone bailout fund.

  A mixed report on the U.S. labor market was expected to keep trading volatile going into the weekend.

  German Chancellor Angela Merkel said hardly any countries in the Group of 20 industrialized nations are willing to participate in the euro zone bailout fund, throwing cold water over plans to stabilize Europe's sovereign debt crisis.

  Merkel's announcement shows " the failure of global leaders on how to deal with the debt crisis," said Rick Meckler, president of investment firm LibertyView Capital Management in New York.

  Financial shares were the worst performing on Wall Street, with the KBW capital markets index down 2.3 percent.

  Shares of Jefferies Group Inc tumbled more than 7 percent after brokerage Keefe, Bruyette & Woods cut Jefferies target price but said the investment bank is being " unjustly punished" over perceived exposure to the European debt crisis..

  The focus on developments from Europe has kept stock trading volatile, with the S& P 500 index swinging more than 1.5 percent every day this week. The index is on track to post its first negative week in five after closing on Monday its best month in 20 years.

  The Dow Jones industrial average was down 178.88 points, or 1.49 percent, at 11,865.59. The Standard & Poor's 500 Index was down 21.03 points, or 1.67 percent, at 1,240.12. The Nasdaq Composite Index was down 40.94 points, or 1.52 percent, at 2,657.03.

  In a move to make its deficit targets credible, Italy agreed to have the International Monetary Fund monitor the country's progress with long delayed reforms of pensions, labor markets and privatization. Italy's debt burden could be the market's next target after a resolution of Greece's crisis.

  A government report showed the U.S. economy added fewer jobs than expected in October, but a fall in the jobless rate to a six-month low and upward changes to prior months' job gains pointed to underlying strength in the labor market.

  " It's not a game-changer, but when you take into account the upward revision to prior months and the drop in the unemployment rate, it's a step in the right direction," said John Canally, economic strategist at LPL Financial in New York.

  Equities earlier held to the previous day's gains after Greece called off a referendum that could have threatened its membership in the euro zone, easing concerns about a Greek default.

  Investors retained some appetite for equities as Groupon Inc raised $700 million in an initial public offering, making it the largest IPO by an Internet company since Google Inc in 2004.

By Clara Ferreira-Marques

  LONDON (Reuters) - Global miner Anglo American is set to take control of diamond giant De Beers, buying out South Africa's Oppenheimer family in a $5.1 billion deal that ends the dynasty's direct links to the diamond business after almost a century.

  Anglo has long been eyeing a deal to increase its 45 percent stake in unlisted De Beers -- which vies with Russia's Alrosa for the title of the world's largest diamond producer -- but Friday's announcement caught the market by surprise and sent the miner's shares up almost 4 percent.

  The Oppenheimers have resisted Anglo's approaches for years and held on to their 40 percent stake even through the aftermath of the 2008 crisis which left shareholders forced to inject cash into De Beers as the luxury market tumbled.

  It was unclear what prompted the family to change its mind, but the Oppenheimers indicated the decision to agree to Anglo's latest ouverture had taken into account a number of factors, including the need to diversify their investments.

  James Teeger, managing director of E. Oppenheimer & Son, the family holding company, said the decision had been " momentous" and hinged on an agreement on price -- long a point of difference between Anglo and the South African family.

  " After a long deliberation which took many factors into acount, one of which obviously is diversification, the family decided to unanimously accept the offer," he said.

  Anglo's motivation is a bigger share of De Beers in a booming market, as China and India turn to diamond jewellery even in the face of an uncertain economic outlook. A 10-year supply deal with Botswana in September proved a key catalyst, prompting Chairman John Parker to again approach the Oppenheimer family.

  Sources familiar with the negotiations said the talks had been " difficult" for the Oppenheimers, but the time was felt to be right.

  " They are tied up in one asset and we are currently in a very volatile environment," said one of the sources. " Anglo, of course, will look to the longer term."

  Nicky Oppenheimer, grandson of the dynasty's founder, is currently De Beers chairman, and will remain in place at least until the deal closes in the second half of 2012. The family also owns a direct stake of just over 2 percent in Anglo and has no plans to sell, Teeger said.

  The family has yet to decide how it will redeploy the cash, but a " substantial" portion will be invested in Africa.

  SPARKLING PRICE?

  Anglo American Chief Executive Cynthia Carroll, who said the company had been working on the acquisition " for years" , said the long-term fundamentals for the diamond industry had prompted the deal, along with security of supply underlined by the agreement with Botswana signed in September.

  By 2015, China, India and the Gulf could overtake the United States as top diamond consumers, opening a huge market, and one increasingly suited to corporations, instead of the families and individuals whose links once dominated diamond trade.

  " In China, only 15 years ago, there was virtually no culture of the diamond engagement rings," Carroll told reporters. " Today more than half the brides in Beijing and Shanghai receive diamond engagement rings."

  De Beers posted a 55 percent jump in first-half earnings in July on the back of record sales and an unprecedented jump in prices, driven by China, India and the United States, still the world's largest consumer of diamond jewellery.

  Analysts and investors said the deal was a good one for Anglo at a valuation of around 6 times 2011 EBITDA, which is in line with far smaller, listed diamond producers like Petra Diamonds. Shares in Anglo were up 2.3 percent at 24.10 pounds just before 1300 GMT, outperforming an almost 1 percent increase in the sector.

  " It looks like they got it at a good price," said Peter Major, analyst at Cadiz Corporate Solutions in Cape Town.

  " De Beers doesn't have the control over the market it used to, but it is still the biggest player and it's got a 120-year history in the business."

  Analysts at Liberum said they estimated the cash acquisition, which will not require new financing, would be 7.5-8.0 percent EPS accretive for Anglo over the next 3 years.

  " We think this deal will be taken positively. Shareholders have been clamouring in recent years for Anglo to either increase its stake in De Beers or to IPO its stake," they said.

  Carroll said a listing was not currently on the cards.

  She also dismissed speculation the move was linked to a decision by Chile's state-owned copper producer Codelco to exercise an option to buy 49 percent of Anglo's assets in the country's south. Codelco said last month it had secured a $6.75 billion bridging loan to buy the stake.

  Anglo American said it had reached a deal with the CHL Group, which represents the Oppenheimer family interest, but added Botswana, which currently holds 15 percent of De Beers, had a pro-rata pre-emption right over the CHL shares, potentially lifting the country's ownership to 25 percent.

  Botswana, the world's top diamond producing country, is currently considering its position.

  De Beers, founded by Cecil Rhodes in the 19th century, controls about 40 percent of the world's rough diamond supply.

  Anglo has been a shareholder in De Beers for over eight decades and has been the company's largest shareholder since De Beers became a private company in 2001.