Banks, miners nudge FTSE slightly higher

Stronger miners and banks outweighed falls from defensive stocks to leave Britain's top share index slightly higher by the close on Wednesday, while BSkyB (BSY.L) gained after an expected pay-TV review from Ofcom.

The FTSE 100 .FTSE index ended 7.32 points, or 0.1 percent, higher at 5,679.64 having closed 0.7 percent lower on Tuesday and below the 5,700 level for the first time in three sessions.

Banks were the biggest support for the index with Lloyds Banking Group (LLOY.L), Standard Chartered (STAN.L), Barclays (BARC.L) and Royal Bank of Scotland (RBS.L) up 0.3 to 2.3 percent, though sector heavyweight HSBC (HSBA.L) fell 0.3 percent.

Miners also provided support to the index, helped by Morgan Stanley lifting target prices on a number of stocks in a sector review. Anglo American (AAL.L), Xstrata (XTA.L), Fresnillo (FRES.L), Rio Tinto (RIO.L) and Antofagasta (ANTO.L) added 0.2 to 1.5 percent.

Weak data from the United States that showed employers shed 23,000 jobs, missing a forecast increase, prompted a slight dip in midsession trade, but the move was muted with investors relatively confident on the economic outlook.

"The move was muted and for good reason, the bigger picture is that the U.S. economy is stronger and economies elsewhere are recovering. We are in a strong cyclical recovery, " said Steven Bell, director of hedge fund GLC.

Supporting this view, data showed orders received by U.S. factories rose for a sixth straight month in February.

The FTSE 100 gained 6.1 percent in March, its strongest month since last August and is up 4.9 percent this year after gaining 22 percent in 2009. It has gained in four consecutive quarters after seeing five quarters of losses prior to that.

SKY HIGHER

BSkyB was the top FTSE 100 riser, up 3.4 percent as Britain's dominant pay-TV group said it will challenge regulator Ofcom's ruling that it must make its premium channels showing sports available to its rivals for a set, lower fee.

Ofcom also said BSkyB could launch a paid-for TV service on the Freeview digital terrestrial platform, which would allow it to target customers who do not have a satellite dish.

Defensive stocks were the main drag on the blue-chip index as investors looked to adjust positions on the last day of the first-quarter.

Food retailers Tesco (TSCO.L) and Sainsbury (SBRY.L) fell 0.6 and 0.3 percent respectively while Imperial Tobacco (IMT.L) lost 1 percent.

Utilities were also on the back foot with National Grid, (NG.L), United Utilities (UU.L) and Severn Trent (SVT.L) down 0.2-1.4 percent.

But Anglo-Dutch consumer goods group Unilever (ULVR.L) bucked the trend among defensives, up 1.2 percent, after BofA Merrill Lynch upgraded its rating to "buy" from "neutral," citing valuation grounds.

Credit Suisse hands CEO $66.6 mln bonus in shares

300 bankers get shares worth over 3 bln Sfr in total

* Compensation part of 5-year bonus scheme

* Top investment, private bankers get over 30 mln Sfr

* Bumper awards to fuel public debate on executive pay

ZURICH, March 31 (Reuters) - Credit Suisse Group AG (CSGN.VX) stoked debate on executive pay in Switzerland on Wednesday by awarding Chief Executive Brady Dougan shares worth around 71 million Swiss francs ($66.60 million) under a five-year bonus plan.

Almost 400 of its executives and other managers would receive shares worth a total of over 3 billion francs under the incentive plan, Switzerland's second-biggest bank by assets said.

Head of investment banking Paul Calello and private bank chief Walter Berchtold pocketed shares worth around 37 million francs and 34 million francs, respectively, at Thursday's closing price.

The bumper awards are likely to feed a passionate debate on executive compensation in Switzerland, where people will vote in a referendum on a proposal to cap managers' pay.

The proposal seeks to introduce annual approval by shareholders of the salaries of directors and managers of listed companies and also aims to ban special termination or entry payments for top managers.

Credit Suisse made it through the financial crisis without state aid despite a hefty loss in 2008 and returned to a handsome profit in 2009, unlike cross-town rival UBS AG (UBSN.VX) , which had to be bailed out by the government and still lost money last year.

UBS paid its investment banking co-chief over 13 million francs, mainly in bonuses, in 2009 after the unit booked a pretax loss of 6 billion francs, against a loss of 34 billion francs the previous year.

Other European banks like HSBC Holdings Plc (HSBA.L) and Deutsche Bank AG (DBKGn.DE) also gave their top bankers multimillion-dollar bonuses for 2009.

CLAW BACK

Chief Executive Dougan topped Credit Suisse's pay list in 2009 with a total of 19.2 million francs, bringing his pay check back close to pre-crisis levels. The bank paid its executive board a total of 148.9 million francs last year, 132.4 million francs of it in bonuses. [ID:nLDE62O0E2]

Politicians from the Group of 20 countries drafted new bonus rules in the wake of the global financial crisis in an attempt to discourage short-term risk taking, mainly by deferring payouts and by introducing claw-back options. [ID:nL722182]

Credit Suisse unveiled new compensation rules last year allowing the company to hold bonuses for three to four years and potentially claw back pay if investments failed to perform over a prolonged period. [ID:nN20433456]

Credit Suisse said the new compensation structure is consistent with the G20 guidelines, which include a ban on multiyear bonus guarantees.

Dollar touches 3-month peak vs yen, but drops vs euro

The dollar hit a three-month high against the yen on Wednesday and although it slipped against the euro, the greenback remained on track for its best quarterly performance in 12 months on the view that the U.S. economy continues to improve.

The dollar rose as high as 93.63 yen overnight, its highest level since early January, as investors rang in the start of a new Japanese fiscal year by selling the Japanese currency.

The euro also gained on the yen, rising to 126.55 yen, its highest level since early February.

For the first quarter, an index .DYX measuring the dollar against six major currencies was up 4 percent -- its best quarterly performance since the first quarter of 2009. The euro lost 5.5 percent against the dollar this quarter, while sterling fell 6 percent.

Expectations that the Federal Reserve will raise interest rates from record lows before central banks in Japan and Europe tighten monetary policy also boosted the dollar.

Trading, however, was volatile after an ADP report showed a surprising decline in U.S. private-sector jobs in March, sparking concern about the pace of the U.S. economy's recovery.

But after falling briefly below 93 yen, the dollar rebounded, with analysts expecting a government payrolls report on Friday to show the economy added 190,000 jobs in March, albeit aided by temporary government hiring for the 2010 U.S. Census.

Private-sector employers cut 23,000 jobs this month, ADP Employer Services reported. Economists polled by Reuters had expected a 40,000 job gain.

"The negative figure was a bit jarring. People have been focused on private hiring because it should remove the noise of temporary Census-related hiring," said Brian Kim, currency strategist at UBS in Stamford, Connecticut.

The dollar was last up 0.7 percent at 93.42 yen, near a session peak, after dipping to 92.76 yen after the ADP report.

Traders said Japanese banks, hedge funds and life insurers remained heavy dollar buyers after the greenback broke above 93 yen. The Japanese currency also hit a five-week low against the pound.

"With the fiscal year-end repatriation completed, the yen has been under pressure and remains so today," said Marc Chandler, global head of FX strategy at Brown Brothers Harriman in New York in a note to clients.

"Full liquidity will not return to the foreign exchange market until next Tuesday, and this may also encouraged some position adjusting."

EURO UP, BUT GREECE IS A DRAG

The euro rose 0.9 percent to $1.3532, boosted partly by quarter-end demand, though traders said further gains were likely to be slight as markets remained worried about a Greek debt crisis.

The spread between Greek and German 10-year benchmark bonds widened on Wednesday, when Moody's Investors Service downgraded five Greek banks [ID:nWLB1513].

"We could see a (euro) move higher from here, with a possible move to recent highs around $1.3540-50, but whether that can be sustained is questionable," said Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey. "The news out of Europe is still pretty bad."

Sterling rose 0.8 percent to $1.5192, its fourth day of gains, while the dollar fell 1.4 percent to 1.0511 Swiss francs, coming off the lowest since late January in earlier trading, according to Reuters data.

The euro fell to a fresh record low against the Swiss franc at 1.4210 Swiss francs before coming off the low to trade at 1.4226 francs.

Oil bounces above $83 as dollar slips vs euro

Oil rose above $83 on Wednesday, supported by the euro's rise against the dollar despite U.S. government data showing crude inventory rose more than expected and gasoline stocks had a surprise build.

Front-month crude futures on the New York Mercantile Exchange traded up $1.15 at $83.52 a barrel at 1:45 p.m. EDT (1745 GMT), not far off the $83.76 peak hit earlier.

That intraday high was near the year's high of $83.95 hit on January 11, which was the highest since October 2008.

Brent crude for May rose $1.12 to $82.40.

The dollar fell against the euro, though the greenback hit a three-month high against the yen. The dollar was weaker against a basket of currencies .DXY.

Wednesday's U.S. Energy Information Administration oil inventory report showed crude oil stocks rose by 2.9 million barrels to 354.2 million barrels last week, more than the 2.4 million barrels forecast, while gasoline inventories logged a modest but surprise gain.

The EIA report contrasted with industry group the American Petroleum Institute's report from Tuesday showing crude oil stocks rose only 421,000 barrels.

"On the surface you would think this is a bearish report, especially with gasoline showing an unexpected build," Mike Zarembski, senior commodities analyst at Optionsxpress in Chicago, said.

"But traders are focusing on the weakness in the U.S. dollar today, which is keeping commodity prices in general up."

The U.S. stock market fell as weak jobs and regional manufacturing data put hopes for an improving economy in check.

The U.S. shed 23,000 jobs in March, against expectations for a rise of 40,000 private-sector jobs, a report by private employment service ADP showed on Wednesday.

Business activity in the U.S. Midwest expanded less than expected in March. New orders for U.S. factories rose for a sixth straight month in February.

QUARTERLY GROWTH

U.S. oil demand has been showing signs of recovery and China's imports are rising, giving market bulls hope for sustained growth by the world's top two oil consumers.

After the biggest annual rise in 36 years in 2009, most commodities continued to rebound on general optimism that the economy is recovering and demand will continue to improve.

In addition, many commodities have posted strong sales to China, the largest consumer of many goods such as base metals and food staples.

Oil prices this quarter have traded from that $83.95 peak in January to a low of $69.50 a barrel in February.

That sub-$15 range is more stable than the wide price swings in the previous two years. Implied volatility for U.S. crude is now at its lowest level since prices surged to a record $147.27 a barrel on July 11, 2008, before plummeting to $32.40 in December of that year.

The International Energy Forum in Cancun, Mexico, will complete a two-day meeting against a backdrop of prices stabilized in the $80 per barrel area with OPEC officials unsure how to respond if prices push higher.

Gold slips as euro zone woes lift dollar

Gold eased below $1,100 an ounce in Europe on Wednesday as the dollar rose nearly 1 percent versus the euro, with persistent worries over the fiscal health of debt-laden Greece weighing on the single currency.

Spot gold was bid at $1,094.55 an ounce at 1027 GMT, against $1,101.65 late in New York on Tuesday. U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange fell $9.10 to $1,094.60 an ounce.

The euro fell to its lowest since early May last year against the dollar as investors flocked to the perceived safety of the U.S. currency on concerns over the euro zone.

"If we continue to have nervousness over Europe and the euro, then we are likely to see supported dollar values and therefore slightly weaker gold values," said David Wilson, an analyst at Societe Generale.

The move comes ahead of a European Union summit later this week, and after Germany signaled it may accept European financial aid for Greece as a last resort.

Uncertainty over Greece is likely to continue to weigh on the euro, Credit Agricole said in a note.

"It looks unlikely that the summit will generate any concrete EU plans that will sufficient to assuage market nerves," it said.

"Instead it seems that the Germans and the French, if speculation is to be believed, both agree that the IMF should be involved in any support."

Euro-priced gold is benefiting from weakness in the currency, rising 0.4 percent to 819.42 euros an ounce versus 816.04 euros late on Tuesday.

OIL SLIDES

Gold typically falls as the dollar firms, as strength in the U.S. unit curbs gold's appeal as an alternative asset and makes it more expensive for holders of other currencies. That link weakened earlier this year, but has since been restored.

Among other commodities, oil also fell nearly $1.50 a barrel after a report showed a surge in U.S. crude inventories, fuelling fears about demand recovery from industrialized nations as Europe struggled to manage Greece's debt crisis.

The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, said its holdings rose 4.6 tons on Tuesday to 1,120.079 tons, their highest since January 7.

"The increase in ETF holdings yesterday is encouraging, as is the scale of buying around and below $1,100, and suggests further pockets of investment diversification will continue to underpin prices," said TheBullionDesk.com analyst James Moore.

On the supply side, the Russian Gold Industrialists' Union said the country's gold output would fall 10 percent year-on-year in the first quarter. Russia was the world's fifth largest gold producer last year.

Silver was bid at $16.68 an ounce against $16.97, tracking losses in gold, while platinum was at $1,587 an ounce against $1,607 and palladium slipped to $450.50 against $464.50.

Oil falls under $81 as U.S. stocks build

Oil fell by more than $1 per barrel to under $81 on Wednesday on concerns over a build-up in U.S. crude stocks, the chance gasoline demand would not stretch supplies and underlying lack of confidence in global recovery.

U.S. crude oil futures for May touched a low of $80.35 a barrel and by 1011 GMT (7:11 a.m. EST) were trading down $1.42 at $80.49. It has traded between $69 and $84 so far this year. London ICE Brent

for May was down $1.37 at $79.33 after earlier dipping to a low of $79.30.

U.S. crude stockpiles jumped 7.5 million barrels the week ended March 19, five times as much as forecast in a Reuters poll , the American Petroleum Institute (API) said on Tuesday.

Supplies of distillates including heating oil and diesel fell 2.5 million barrels while gasoline stocks were little changed.

"If you just add up 7.5 minus 2.5 you have a net increase of 5 million, and that is pretty big," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp.

"Refiners are trying to maintain their margins by cutting crude runs to keep product inventories down," Nunan said, adding that U.S. stockpiles are still "much higher" than their five-year average.

The gasoline crack -- the theoretical premium refiners get for making gasoline from crude -- touched a high for 2010 around $14.60 earlier this week and is now just under $13. Demand often rises going into the U.S. summer as drivers take off on holiday.

"With plenty of stocks and relative values that are favoring (making gasoline), the U.S. consumer will have to drive a long way before putting the supply capacity at risk," said Petromatrix in a report.

Oil inventories could have less influence on prices, however, than equities, according to Breaking Views columnist John Kemp.

Data in the euro zone painted a mixed picture on the economy, with manufacturing activity growing in March at its highest level since the end of 2006 but industrial orders in January falling, underscoring the fragility of the economic recovery.

DOLLAR GYRATIONS

Petromatrix added that "predicting the dollar gyration in front of the European meeting on Greece is a difficult task" this week, adding the gasoline crack would be their focus.

The dollar strengthened further against a basket of currencies ahead of Thursday's meeting of European Union leaders to discuss how to help Greece deal with its debt crisis and prevent problems spreading to other economies.

"When people are concerned about Greece, they are also concerned about the economic health of Europe and consequently oil demand," Nunan said, adding he thought the inverse relationship between the dollar and oil was starting to break.

Oil market investors and traders will be seeking confirmation of the API figures from weekly U.S. government statistics that will be published by the Energy Information Administration (EIA) on Wednesday at 1430 GMT (10:30 a.m. EST).

Crude prices have traded in a much narrower range this year than the $50 or so in 2009 and continue to lack fundamental momentum to break out either up or down.

Ministers of the Organization of the Petroleum Exporting Countries (OPEC) said they expect oil prices to stay around current levels for the rest of the year.

The group agreed to leave production targets unchanged last week citing accelerating demand growth in the second half and continued economic uncertainty.

Europe shares slip on Portugal debt downgrade

European shares edged down around midday on Wednesday, surrendering early gains after Fitch Ratings downgraded Portugal's sovereign rating, with banks among the worst performers.

By 1149 GMT (7:49 a.m. EDT), the FTSEurofirst 300 index of top European shares was down 0.2 percent at 1,069.93 points, after dropping as low as 1,064.65 soon after the Fitch announcement.

The pan-European index has gained around 65 percent since hitting a record low in March last year, but the market's sharp recovery from a dismal 2008 has lost steam over the past few months, and Europe's benchmark is up a meager 2.2 percent so far in 2010.

Banks reversed earlier gains to turn negative and feature among the worst performers. BBVA, HSBC and Credit Suisse

slipped 0.7 to 2.6 percent.

Banco Santander shares fell 3.7 percent on speculation the bank was guiding down on its Brazilian loan growth target in London, traders said. Santander was not immediately available for comment. "The Fitch news has turned the market around. This is a reality check. It blows away the view that the Greek situation is contained," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.

"Investors are taking money off the table."

Fitch cut Portugal's debt rating by one notch to AA-. The move comes as concerns over Greece's debt situation remain and a day before an European Union summit.

Across Europe, the FTSE 100 index was down 0.3 percent, Germany's DAX fell 0.2 percent and France's CAC 40 lost 0.6 percent, while Portugal's share benchmark fell 1.8 percent.

OILS WEIGH

Oil stocks were out of favor. Crude lost 1.8 percent on concerns over a build-up in U.S. crude stocks. Cairn Energy, Royal Dutch Shell and Total fell 0.4 to 1.2 percent.

On the upside, Deutsche Boerse gained 4.6 percent after it announced more cost savings measures.

Fiat rose 2.3 percent after newspaper reports said it is planning higher than expected job cuts of 5,000 in Italy and may spin off its car activities sooner than thought this summer. Fiat declined to comment on the reports.

Drugmakers added the most points to the index as investors stuck to the safety of defensive stocks. Novartis, GlaxoSmithKline and Novo Nordisk gained 0.2 to 1.2 percent.

At 1230 GMT, investors will closely watch the UK budget for detail on fresh economic measures and any sign of a boost in popularity for the ruling Labour Party.

Later in the session, investors will focus on a range of data from the United States, including the mortgage market index, durable goods figures and new home sales numbers, for further evidence of the country's economic recovery.