LONDON (Reuters) - Britain extended a freeze on assets to a further 20 members of Libyan leader Muammar Gaddafi's entourage on Friday and has impounded around 100 million pounds of Libyan currency.

  Around 2 billion pounds of assets belonging to Libyan interests are believed to have been frozen under sanctions against Gaddafi's government after its violent crackdown on protests against Gaddafi's 41-year rule.

  The asset freeze was imposed last week and initially applied only to Gaddafi and his immediate family. It now extends to 26 people.

  " The Chancellor is determined that the UK and international community does all that it can to ensure that financial assets cannot be used against the interests of the Libyan people," finance minister George Osborne's department said.

  British authorities seized the cargo of Libyan currency from a ship that returned to its waters on Wednesday after it was unable to dock in the Libyan capital of Tripoli because of security concerns.

  The boat eventually docked in Harwich, eastern England, where British border guards unloaded its containers and took them to a secure location.

  Prime Minister David Cameron said earlier this week that Britain had blocked a separate shipment of 900 million pounds in banknotes destined for Libya.

  Treasury officials and HSBC refused to comment on reports that the bank holds many of the cash and assets affected by the freeze.

  The Libyan Investment Authority, the country's sovereign wealth fund, has a stake of more than 3 percent in Pearson -- publisher of the Financial Times newspaper. That stake has been frozen.

  (Editing by Elizabeth Fullerton)

* Greek exports have surged 35 pct y/y in fourth quarter

  * Rise due to commodity boom, not to competitiveness gains

  * Needs more high tech exports to catch up with EU partners

 

  By Harry Papachristou

  ATHENS, March 4 (Reuters) - A surge in exports has given Greece a glimmer of hope in the grim aftermath of its debt crisis, but underlying figures show a lack of competitiveness that is at the root of its problems is not going away.

  Exports surged 35 percent in the last quarter of 2010, chiefly on the back of booming global commodity prices, which drove sales of Greece's iron bars, aluminium and copper up by as much as 75 percent in the January to November period.

  That has done little to stem the overall slide in growth due to public sector cutbacks that are Athens' contribution to last year's international bailout package, but it has allowed the government to claim it is making progress with reforms.

  " Greece is having a veritable export explosion," Prime Minister George Papandreou said last month. " This is due to continuous structural reform and the sacrifices the Greek people made last year."

  Analysts, however, say the commodities boom only masks the country's lack of successful manufacturing and services sectors that can compete for market share in the world's fastest-growing emerging markets.

  " The exports surge is nothing revolutionary, Greece is benefiting from the commodities cycle," said Nikos Magginas, an analyst at the National Bank of Greece.

  The conclusion of most is that Greece faces the harsh reality of simply having to reduce wages at home to make business more competitive in the short term -- and there is as yet little sign of that happening.

 

  ONLY PRICES RISING

  With years of EU- and IMF-imposed austerity still ahead, export performance will be key to whether Greece can create enough economic growth to service its huge debt, expected to hit about 160 percent of GDP after the bailout expires in 2013.

  Foreign sales of petroleum products also rose 97 percent year-on-year in the fourth quarter, but that was also chiefly due to higher world oil prices.

  Exports of non-oil products, by contrast, rose just 1.9 percent, according to central bank data, and the metals sales also hold little hope of a grand expansion.

  " Metal sales are rising but there is no significant increase in volumes," said Victor Labate, an analyst at National Securities.

  The export performance also pales next to that of its EU partners. Total EU exports rose at an annual pace of 18 percent in January to November of last year, according to Eurostat figures, three times faster than Greece's.

  " Greece is benefiting less from the strength of global demand," said Ben May of Capital Economics. " Greek firms' export orders remain far weaker than the equivalent euro zone index."

  The boom has lifted the shares of metals firms and refiners such as Viohalco < VIO.AT> and Hellenic Petroleum < HEPr.AT> , which have outperformed the Athens benchmark index < .ATG> . But it did not stop GDP from shrinking at a record annual pace of 6.6 percent in Q4, its fastest decline since the 1970s.

 

  NO WAGE CUTS

  Private sector wages were frozen last year and they may need to fall to boost exports' competitiveness in the short term.

  This was the model adopted by EU members Latvia and Lithuania to get their economies going again without devaluing their currencies and Greece is similarly locked into the euro.

  But Greece is a much bigger economy with years of relative prosperity behind it and policymakers and the public reject the idea that wage cuts will solve the problem.

  " We can't compete on the logic of granting Chinese or Indian salaries," Papandreou, who has axed civil servants' pay to slash the country's budget gap, said last month.

  Irking the EU and the IMF, Papandreou's Socialist government has watered down a law which would theoretically allow companies to cut wages over the objections of labour unions.

  Neogal, a small dairy producer which was the first to try to apply the law, quickly gave up after being confronted with a wave of bad press and consumers' protests.

  About two thirds of Greek exports are low-tech, low-profit wares such as foodstuffs and building materials, compared with just one third in the euro area. This needs to change and the government is using EU funds to subsidize research.

  The small size of Greek companies -- about 85 percent of them employ less than 10 people -- leaves them struggling to make inroads into the roaring but distant markets of China and India. Goods sold there account for just 1.2 percent of the total, offering little hope for any quick gains.

  Greek exports of manufactured goods account for about 10 percent of GDP, according to central bank figures. Unless this gets closer to the euro zone average of about 30 percent, any hopes for an export-led recovery are remote.

  " The currently small size of exports implies that very dynamic growth rates will be necessary for this demand component to pull the whole economy back to growth," said the European Commission in a report last month.

  Despite an estimated export rise of 5 percent in 2011, the Commission expects the Greek economy to shrink by about 3 percent this year, its third consecutive year of recession. Analysts say that if Greece bets on a turnaround in 2011, it would do better to rely on more traditional foreign currency earners, such as tourism and shipping. They too would benefit from lower wages and lower prices.

  " These remain the best hopes for a recovery," said National Bank's Magginas. (Editing by Patrick Graham) (harry.papachristou@thomsonreuters.com tel,: +30 210 33 76 455 Reuters Messaging: harry.papachristou.reuters.com@reuters.net)) 1=.7228 Euro)

LONDON, March 4 (Reuters) - Better-than-expected U.S. jobs data failed to impress investors on Friday, paring European share gains and setting Wall Street up for possible losses.

  Non-farm payrolls increased by 192,000, the U.S. Labor Department said, above market expectations for 185,000 jobs. Data for December and January was revised to show 58,000 more jobs created than previously estimated.

  But a lot of the increase was already priced into markets so after an early jump, stocks fell back. Investors also said February's numbers were exaggerated by the hit to January figures from bad weather.

  The euro remained buoyant against the dollar, following the European Central Bank's steer on Thursday towards a rate hike as early as next month. The euro was at $1.3960.

  World stocks as measured by MSCI were up 0.2 percent, off their highs, and the FTSEurofirst 300 was up 0.1 percent.

  (Editing by Ruth Pitchford)

* Labor Department's surveys match, for a change

  * December, January jobs revised up

  * State, local jobs once again a drag

  By Emily Kaiser

  WASHINGTON, March 4 (Reuters) - Mystery solved?

  For the first time in months, the U.S. Labor Department's job market assessment matches up with private surveys showing a pick-up in employment that is finally fast enough to put a substantial dent in the unemployment rate.

  Construction, manufacturing and services all contributed to the slightly stronger-than-expected February payroll gain of 192,000 jobs.

  The dip in the jobless rate to 8.9 percent also shows a strengthening labor market.

  For the U.S. Federal Reserve, the improvement will likely be seen as a welcome sign of a self-sustaining recovery, but the jobless rate remains far above normal, which means interest rates will stay extraordinarily low.

  FROM CLASHING TO MATCHING

  * Friday's report showed consistency between the two surveys the Labor Department uses to measure the job market. In the prior two months, the surveys gave conflicting signals.

  * The establishment survey, used to determine the net monthly payrolls number, showed strong gains in private-sector hiring, particularly in professional and business services, manufacturing and construction.

  * The household survey, from which the unemployment rate is derived, showed 250,000 more people reporting they were employed, and a drop of 190,000 in those saying they were unemployed. That was the primary reason for the dip in the jobless rate, unlike in December when the drop was largely due to discouraged workers giving up the job search.

  * The labor force participation rate, a measure of how many people are actively in the job market, was unchanged at 64.2 percent.

  * The government's data now looks more in line with private surveys such as the monthly ISM and ADP reports, which have shown a pick-up in hiring in recent months.

  * The Labor Department revised up its job tally for December and January, putting it closer in line with those healthier-looking private-sector surveys.

  STATE AND LOCAL PAIN SUSTAINED

  * State and local government budget strains were obvious once again. State governments shed 12,000 jobs, while municipalities lost 18,000.

  * Teaching jobs accounted for the majority of the losses.

  * Other sectors showing declines in February included retail, down 8,100 jobs. The losses there were concentrated in building material and garden supply stores, as well as electronics and appliances chains. (Editing by Theodore d'Afflisio)

By Maria Golovnina

  TRIPOLI (Reuters) - Rebels vowing " victory or death" clashed with Muammar Gaddafi's forces near a key oil terminal and gunfire rang out in the capital as opposition protesters gathered on Friday in the strongman's last bastion.

  Eastern-based rebels told Reuters they were open to talks only on Gaddafi's exile or resignation following attacks on civilians that have provoked international condemnation, a raft of arms and economic sanctions and a war crimes probe.

  Abdullah al-Mahdi, a rebel spokesman, told Al Jazeera television opposition fighters would attack the capital once a " no-fly" zone was enforced by international powers to try to shatter Gaddafi's grip on the North African oil producer.

  Western nations have called for Gaddafi to go and are considering various options including the imposition of a no-fly zone, but are wary about any offensive military involvement to stabilise the world's 12th-largest oil exporter.

  In Tripoli, a convoy of 14 sports utility vehicles carrying security forces sped through a checkpoint heading into an area of the capital where demonstrators had staged a protest against Gaddafi's 41-year-old rule.

  " They fired teargas. I heard shooting. People are scattering," a Reuters reporter said from the Tajoura district in the east of the capital.

  In the east, rebels advanced towards the key Ras Lanuf oil terminal, 600 km (400 miles) east of Tripoli, calling for foreign air strikes to set up a no-fly zone after three days of attacks by government jets.

  " Victory or death ... We will not stop until we liberate all this country," Mustafa Abdel Jalil, head of the rebel National Libyan Council told supporters of the two-week-old uprising.

  Ahmed Jabreel, an aide to Abdel Jalil, said if there was any negotiation " it will be on one single thing -- how Gaddafi is going to leave the country or step down so we can save lives. There is nothing else to negotiate" .

  Rebel volunteers defending the opposition's expanding grip on a key coast road said a rocket attack by a government warplane just missed a rebel-held military base which houses a big ammunition store in the eastern town of Ajdabiyah.

  " We're going to take it all, Ras Lanuf, Tripoli," Magdi Mohammed, an army defector, fingering the pin of a grenade, told Reuters at the rebels' front-line checkpoint.

  The air attacks have failed to stop the rebels using the coast road to push their front line west of Brega, an oil terminal town 800 km (500 miles) east of Tripoli.

  Amid growing international concern about dwindling food and medical supplies in some rebel-held areas, diplomatic efforts are accelerating to end a conflict that the West fears could stir a mass refugee exodus across the Mediterranean to Europe.

  U.S. President Barack Obama said he was concerned a bloody stalemate could develop between Gaddafi and rebel forces but gave no sign of a willingness to intervene militarily.

  " Muammar Gaddafi has lost the legitimacy to lead and he must leave," Obama said.

  The popular uprising against Gaddafi, the bloodiest yet against a long-serving ruler in the Arab world, has knocked out nearly 50 percent of the OPEC-member's 1.6 million barrels of oil per day output, the bedrock of its economy.

  The upheaval is causing a humanitarian crisis, especially on the Tunisian border where tens of thousands of foreign workers have fled to safety. But an organised international airlift started to relieve the human flood from Libya as word spread to refugees that planes were taking them home.

  Rebels holding the port city of Zawiyah, 50 km (30 miles) west of Tripoli said they had launched counter-attacks against Gaddafi's forces massing in the area and warned supplies of medicines and baby milk were running low.

  ASSET FREEZE

  " Women and children are at home while the men are armed and roam the streets and city limits in anticipation of a major attack by pro-Gaddafi forces," resident Ibrahim told Reuters by telephone, giving only one name.

  As international efforts progressed to isolate the Libyan leader, Austria widened an asset freeze list to include a top official at the Libyan Investment Authority, Mustafa Zarti, because of possible ties to Gaddafi's inner circle.

  In Zawiyah, residents said Gaddafi's forces had deployed in large numbers over the past days. " We estimate there are 2,000 on the southern side of town and have gathered 80 armoured vehicles from the east," resident Ibrahim said, adding a battalion had also come from the west side.

  His account could not immediately be verified.

  The government says it is not using military force to retake rebel-held cities although one official did not rule it out if all other options were exhausted.

  The International Committee of the Red Cross (ICRC) said reports indicated two Libyan Red Crescent ambulances were shot at in Misrata, west of Benghazi, and two volunteers were wounded.

  In The Hague, International Criminal Court prosecutor Luis Moreno-Ocampo said Gaddafi and members of his inner circle could be investigated for possible war crimes committed since the uprising broke out in mid-February.

  In London, the London School of Economics said it had asked a leading legal figure to investigate its ties to Libya after its director resigned for accepting funding from a charity run by Saif al-Islam.

  Howard Davies, a former deputy governor of Britain's central bank who has also held a series of senior positions in the business world, quit late on Thursday after accepting that he had damaged the prestigious college's reputation.

  He is the first high-profile British figure to lose his job over commercial ties with Gaddafi. (Additional reporting by Maria Golovnina, Yvonne Bell and Chris Helgren in Tripoli, Tom Pfeiffer and Alexander Dziadosz in Benghazi, Souhail Karam and Marie-Louise Gumuchian in Rabat, Yannis Behrakis and Douglas Hamilton on Tunisia border Christian Lowe and Hamid Ould Ahmed in Algiers Writing by William Maclean Editing by Giles Elgood)

By Wayne Cole

  SYDNEY, March 4 (Reuters) - Lost in a blizzard of Australian data this week has been some remarkably benign news on prices that suggests the Reserve Bank of Australia (RBA) is right to be relaxed on inflation and many analysts are wrong to tip a rate increase by mid-year.

  While market economists keep warning of lurking price pressures, a private measure of consumer prices showed underlying inflation hardly has a pulse at the moment.

  The TD Securities-Melbourne Institute gauge attempts to provide a monthly mirror of the official consumer price index (CPI), which is released only quarterly.

  The gauge has had a mixed track record of predicting movements in the official CPI, but since early 2010 it has been consistent in overestimating inflation.

  So it was notable that its trimmed mean measure of underlying inflation rose just 0.2 percent in February after a 0.1 percent fall in January.

  Using mid-quarter prices, the gauge implies underlying inflation should be just 0.4 percent for the whole quarter, matching the surprisingly subdued price increases of the previous quarter.

  Such an outcome would leave first quarter annual inflation at 1.9 percent, the slowest pace since 1999 and below the floor of the RBA's long-term target range of 2 to 3 percent.

  Year-on-year comparisons can be subject to large base effects so the RBA often likes to sum two quarterly changes and annualise the result. But in this case, that would give an even lower underlying inflation rate of just 1.6 percent.

  The official CPI report is due out on April 27, just six days before the central bank's May policy meeting.

 

  COMFORTING DATA

  There was a similar message buried in the government's own report on gross domestic product (GDP), where the deflators used to take inflation out of the numbers proved pleasantly placid.

  The deflator for consumption was up a modest 1.9 percent for the year, while that for domestic final demand rose only 1.6 percent. The impact of the high Australian dollar was clear in the deflator for import prices which dropped 2.8 percent.

  And for all the fear of wage inflation, real unit labour costs fell 0.6 percent in the quarter to be down 1.3 percent on the year.

  Now, the RBA is well known for being pre-emptive when it comes to controlling inflation. It raised back in November even though just-released data for the third quarter showed underlying inflation slowed to 2.5 percent, from 2.7 percent.

  But at that time the central bank thought 2.5 percent would be the absolute bottom for inflation and it would only go higher from there. The drop to 2.25 percent in the fourth quarter was a major surprise, and there is no way it could have expected inflation might reach 2 percent or lower this quarter.

  While price pressures might well grow from here, the starting base would now be so much lower than anticipated that it must offer the RBA the scope to hold rates for longer.

  It should also be remembered that back before the November increase policy was considered neutral, whereas now RBA Governor Glenn Stevens considers " financial conditions are on the firm side" .

  Thus, the bar to another tightening must be higher than it was in November.

  At the same time, central banks across Asia are now tightening policy to fight inflation and cool their economies. Even the European Central Bank is flagging an increase for April.

  All of which does some of the RBA's work for them.

  It should also make analysts at least reconsider the chance of a rise in the 4.75 percent cash rate by mid-year. A Reuters poll of 20 economists taken just last week found no less than 14 expected a rise to 5 percent by the end of June .

  While the RBA may be pre-emptive, would it really increase with underlying inflation at, or even under, the bottom of its 2 to 3 percent target range?

  Annette Beacher, head of Asia-Pacific Research at TD Securities, has been as hawkish as anyone in calling for a rise as early as May. But she conceded that if their gauge proved right on inflation, they would abandon the May call in favour of a tightening in the back end of the year. (Editing by Tomasz Janowski)

By Maria Golovnina and Michael Georgy

  TRIPOLI (Reuters) - Shooting rang out across a district of the Libyan capital on Friday as forces loyal to Libyan leader Muammar Gaddafi tried to break up a crowd of protesters shouting " Gaddafi is the enemy of God!"

  The demonstrators spilt out of the Murat Adha mosque in the Tajoura district of eastern Tripoli after Friday prayers, and several hundred of them began chanting for an end to Gaddafi's forty years in power.

  A few minutes later, pro-Gaddafi security forces in military fatigues and with green scarves around their heads arrived at the scene of the protest. " They fired tear gas. I heard shooting. People are scattering," said a Reuters reporter.

  Another reporter on the edge of the Tajoura district said heavy shooting could be heard and a convoy of 14 Toyota sports utility vehicles, with security forces on board, sped through a checkpoint towards the site of the protest.

  Tripoli is Gaddafi's principal stronghold after large swathes of the country rejected his rule, and the authorities have tried to portray it as a city going about its life as normal, but the protest punctured that image.

  " This is the end for Gaddafi. It's over. Forty years of crimes are over," said Faragha Salim, an engineer at the protest in Tajoura.

  Friday is the day of religious observance in the Muslim world when thousands of men assemble in the mosques to pray and listen to sermons. It can also be a flashpoint for outpourings of anger.

  A revolt against Gaddafi's four-decade rule has left the eastern side of the country, and several towns elsewhere, in rebel control. He is facing international condemnation over the hundreds killed in a crackdown on the revolt.

  EXCHANGES OF FIRE

  In rebel-held Zawiyah, about 50 km (30 miles) west of the Libyan capital, pro-Gaddafi forces attacked to try to stop people attending Friday prayers in the town, a rebel spokesman told Reuters by telephone.

  Yousef Shagan said the two sides were exchanging fire on the outskirts of the town, and that two fighters loyal to Gaddafi had been killed.

  " They attacked because they are trying to prevent people from joining Friday prayers. Gaddafi's soldiers are fighting. Our people have encircled them in western Zawiyah," he said.

  The authorities tried to prevent foreign media from reporting independently on the protests in Tripoli.

  Security guards stood in the way when journalists including Reuters reporters tried to walk out of the gates of the media hotel to travel to neighbourhoods in the capital where anti-Gaddafi protests are anticipated.

  Officials later allowed them out of the hotel but only if they boarded buses with government drivers who were taking them to locations selected by the authorities.

  A Libyan government spokesman said journalists' movements were being restricted because their presence could trigger violence from what he described as affiliates of al Qaeda.

  " These are exceptional circumstances. I know you're going to talk about it and twist it the way you want," said the spokesman, Mussa Ibrahim.

  " We are preparing to pay this price of preventing you guys from reporting to avoid turning Tripoli into Baghdad."

  (Writing by Christian Lowe Editing by Giles Elgood)

By Loucoumane Coulibaly and Ange Aboa

  ABIDJAN (Reuters) - Ivorian security forces shot dead seven women protestors on Thursday and the United Nations said at least 365 people had died in violence since disputed elections that have taken the country to the brink of civil war.

  Many others were wounded in the attack on the all-women demonstration against incumbent Laurent Gbagbo in the northern Abidjan suburb of Abobo, two witnesses and a security source said.

  The U.N. said some 200,000 people had fled their homes in Abobo, leaving it almost completely deserted after heavy fighting last week.

  The power struggle between presidential claimant Alassane Ouattara and Gbagbo, who has rejected widespread calls to stand down after a November 28 election, could push the top cocoa grower back into civil war.

  ICE cocoa hit a fresh 32-year peak of $3,726 a tonne in early trading on Thursday as the crisis deepened.

  The incident took place as women gathered at the Anador roundabout in Abobo for a planned march to call on Gbagbo to step down, an eye witness said.

  " Men in uniform drove up and started shooting randomly. Six women died on the spot. They were all shot and the other women are crying," said Idrissa Diarrassouba. A seventh woman later died in hospital.

  A poll meant to reunify a country divided since its 2002-3 war has instead triggered a crisis that has seen killings and forced people from their homes in Abidjan and the west, where some 70,000 have crossed into Liberia.

  Last week Abobo saw heavy clashes between pro-Gbagbo forces and gunmen who are calling themselves the " invisible commandos" and have taken control of parts of the area. Pro-Gbagbo forces remain in the area around Anador.

  Another Abobo resident said that 10 women had been killed and dozens others wounded when the security forces opened fire.

  " I'm standing next to a body right now, with a bullet hole in her neck," said Moussa Fofana, a teacher.

  There was no official comment on the incident. A military source confirmed the shooting but said it had been an accident.

  " It was a blunder that we regret," the source said, adding the security forces had opened fire due to the tension and the fact they believe rebels sometimes hide amongst civilians to attack them. " It is unfortunate that this happened," he said.

  Gbagbo has retained the loyalty of much of the security forces but has been hit by a raft of sanctions. Ouattara, meanwhile has the support of the international community and is holed up in an Abidjan hotel, protected by U.N. troops.

  Both men have set up their own governments but neither are functioning properly and the economy is paralysed.

  MOUNTING TOLLS

  U.N. mission spokesman Hamadoun Toure said the official confirmed death toll from violence since the election was 365, but diplomats believe the real figure to be far higher because the Ivorian military rarely discloses casualties of its own or civilians killed by its troops.

  Toure said at least 26 civilians were killed and more than 200,000 displaced from Abobo since fighting flared up.

  The International Crisis Group think tank warned Gbagbo was ready to fight to the end " even if it meant throwing Ivory Coast into anarchy and economic disaster," and said Ouattara should seek to form a national unity government to heal divisions.

  " The most likely scenario in the coming months is armed conflict involving massive violence against civilians, Ivorian and foreign alike, that could provoke unilateral military intervention by neighbours, starting with Burkina Faso," ICG said in a report " Is War the Only Option?."

  Scores of gunmen and civilians are believed to have been killed in fighting in the past week, residents say.

  Toure told journalists negotiations were ongoing with both sides to open up a humanitarian corridor into Abobo in order to bring in food aid and medicine.

  He was concerned by reports the " invisible commandos" were preventing some civilians from leaving the areas they control and by attacks against U.N. staff by Gbagbo's youth supporters, who have set up road blocks all over Abidjan to search vehicles of suspected rebels or U.N. staff Gbagbo accuses of aiding them.

  (Additional reporting by Tim Cocks writing by David Lewis and Tim Cocks editing Elizabeth Fullerton)

NEW YORK, March 4 (Reuters) - U.S. stock index futures added to gains on Friday after data showed the U.S. economy created more jobs in February than anticipated and the unemployment rate unexpectedly ticked lower.

  S& P 500 futures rose 3.9 points and were above 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 gained 46 points and Nasdaq 100 futures added 5.25 points.

HONG KONG, March 4 (Reuters) - Hong Kong stocks rose on Friday, ending the week higher as a bout of short-covering after a rally on Wall Street and continued strength in banking shares helped the market recover from the prior week's losses.

  The Hang Seng Index < .HSI> finished the session up 1.2 percent at 23,408.86, gaining 1.7 percent on the week.

  The China Enterprises Index < .HSCE> of top locally listed mainland companies outpaced the broader market on the day as well as on the week. It rose 1.51 percent on Friday and was up 4.7 percent on the week.

  The Shanghai Composite < .SSEC> rose 1.35 percent

  HIGHLIGHTS:

  * Short-sellers pared bets heading into the weekend as stocks on Wall Street rallied and chalked up their biggest single-day gain in three months. Short-selling as a percentage of total turnover picked in Hong Kong this week hitting the highest so far this year on Wednesday.

  * Tencent Holdings Ltd < 0700.HK> , up 4.4 percent, hit a record high partly on short-covering as investors cut bearish bets. Tencent has been on a tear this year and is up 30 percent, easily outpacing the benchmark's 1.6 percent advance and bringing the company's market value to a shade below $50 billion.

  * BYD Co Ltd < 1211.HK> dropped 2 percent as some investors locked in quick gains after the carmaker reported weak February sales. It had gained about 15 percent over the prior two sessions.

  WEEK AHEAD:

  Trade figures from the United States, China, Germany and Taiwan are scheduled for next week, with analysts scouring the data for the impact of the expected pickup in global trade on corporate profits.

  The Hong Kong stock exchange will extend trading hours in a bid to align timings more closely with the Shanghai stock exchange. Trading will begin at 9:30 a.m. and the midday trading break will be between 12:00 p.m. and 1:30 p.m. (Editing by Chris Lewis) (vikram.subhedar@thomsonreuters.com +852 2843 6975 Reuters Messaging: vikram.subhedar.reuters.com@reuters.net))

  2011-03-04 16:28:37

* Indonesia maintains interest rates banks rally

  * Market hopeful on U.S. economy

  * Fairly weak volume as region watches oil market

  By Viparat Jantraprap

  BANGKOK, March 4 (Reuters) - Southeast Asian stock markets rose on Friday amid optimism about the U.S. economic recovery and a decision by Indonesia to maintain interest rates boosted big-cap banks, pushing its market index to a five-week high.

  " Banking stocks had already anticipated it as all of them rallied this morning ... It's a good story for them since they are not under pressure to increase lending rates," said Ikhsan Binarto, equities analyst at Indopremier Securities in Jakarta.

  " I think earning reports by the big caps in coming weeks will help the market regain its bullish trend after a bad performance over the last two months."

  Most other market rose for a second day, albeit in fairly weak volume. Market players are cautious about developments in the oil market, and the potential impact on inflation, as fighting in Libya intensified. Brent oil rose near to $116 on Friday.

  Indonesia's main index ended 1.4 percent higher on the day and up 2.9 percent on the week, Southeast Asia's second best performance behind the Philippines' 3.9 percent gain for the week.

  The export-dependent region is pinning its hopes on U.S. February non-farm payrolls later in the day, with employment expected to have increased by 185,000, which might indicate a sustainable economic recovery is taking root.

  Most indexes were around multi-week highs, with Singapore edging up 0.8 percent, Malaysia 1 percent, Thailand almost 1 percent and the Philippines up 1.3 percent.

  Vietnam pushed 1.5 percent higher, erasing part of a 2.98 percent loss in the previous two sessions.

  Turnover in Thailand, Singapore and Vietnam was at 0.9 times the 30-day average, with Malaysia and Indonesia around average.

  Central banks in the region are in a tightening cycle as consumer prices are rising but the pace will depend on how fast prices rise and whether economic growth slows further, especially as energy costs rise.

  The Bank of Thailand is expected to raise rates again next Wednesday after four increases since July 2010, while the Philippines may finally raise rates this month after inflation came out higher than expected, and Singapore is likely to tighten again in April.

  In Jakarta, PT Bank Mandiri, Indonesia's largest lender, surged 5.1 percent and PT Bank Rakyat Indonesia, the second biggest, jumped 6.6 percent.

  In Singapore, developer Hongkong Land jumped 3.8 percent after it reported strong annual earnings but commodity trading firm Noble Group fell 2.3 percent after it said it had entered into a share placement agreement. (Additional reporting by Janeman Latul in Jakarta Editing by Alan Raybould)

  2011-03-04 18:17:14

By Natsuko Waki

  LONDON, March 4 (Reuters) - Investors face a key stress test in the coming week as the Middle Eastern political crisis, rising oil prices and expectations for higher interest rates slow the ascent of world stocks near their 30-month highs.

  A rally in world stocks, measured by MSCI < .MIWD00000PUS> , stalled just near their peak of mid-February as oil prices raced to 2-1/2 year highs in the face of escalating violence in Libya and other Arab countries.

  However, in a sign of resilience, the MSCI index bounced 1.4 percent in the past week as investors focused on improving corporate and economic fundamentals, with world growth still expected at a reasonable rate of 4 percent this year.

  Data from Thomson Reuters Lipper showed investors put $2.3 billion of fresh cash into U.S. equity funds in the week ended March 2, although they did pull out money from emerging markets.

  Oil will hold key for investors in the coming week, which will see Saudi Arabia's planned protest and a key summit of European leaders on Libya and the sovereign debt crisis.

  According to Reuters data, 30-day rolling correlations of the MSCI world stock index and U.S. crude oil hit -0.4 percent, levels last seen in early 2008. This means stocks fall when oil rises and the link is strongest in three years.

  " Markets have been spooked by fear that we may be in for a 1970s style oil shock. Oil price worries are keeping markets from rallying further," said Lothar Mentel, chief investment officer at Octopus Investments.

  " There isn't too much new bad news from trouble spots, and good macroeconomic news can dominate the market but that can change very quickly. I wouldn't put my money in the sustained rally next week."

  Oil prices and the Volatility Index < .VIX> -- Wall Street's so-called fear gauge -- have also started to move in tandem in the past few weeks.

  Saudi Arabia's stock markets < .TASI> , largely dominated by domestic investors, plunged to fresh 22-month lows on Wednesday before its weekend as concerns intensified ahead of planned protests in the top oil exporter on March 11 and 20.

  Dubai < .DFMGI> and Kuwait < .KWSE> shares hit 6-year lows on Thursday. --------------------------------------------------------------- GRAPHIC oil and stocks correlation http://r.reuters.com/mut38r GRAPHIC Oil and the VIX http://r.reuters.com/dev38r Calculator: oil and impact on GDP http://r.reuters.com/jux28r ---------------------------------------------------------------

 

  REASONS FOR RESILIENCE

  Investor resilience stems from their confidence that the world economy, backed by cheap and abundant cash, will stage a strong recovery this year.

  Reuters calculations show world GDP growth will halve to 2.1 percent in 2011 from current projections only if Brent crude oil < LCOc1> reached $150 a barrel, a 30 percent increase from Friday's prices.

  Oil will have to reach as high as $191 to wipe out world growth, based on assumption that a $10 percent rise in oil prices trims global growth by around 0.5 percent.

  And the corporate sector remains healthy. S& P 500 companies < .SPX> expanded their earnings by nearly 37 percent in the fourth quarter, while Q1 earnings are expected at 13.3 percent.

  Thomson Reuters data showed private equity-backed M& A activity rose 88 percent on the year to $36.3 billion for year-to-date 2011, marking the strongest annual start for leveraged buyouts since 2008.

  German private bank Berenberg says surprises from oil prices and upbeat growth will lead to higher nominal interest rates.

  " The two surprises roughly offset each other in their impact on global economic growth. But they do point to less subdued inflation and somewhat higher nominal interest rates," its chief economist Holger Schmieding said in a note to clients.

  Expectations for higher interest rates grew after the European Central Bank warned on Thursday it could soon raise the cost of borrowing. This has sent the interest rate-sensitive two-year German government bond yield to a 20-month high of 1.783 percent < DE2YT=TWEB> .

  The ECB's hawkish stance is raising concerns about the implications for struggling euro zone countries, ahead of a key European Union summit on March 11 where leaders discuss a full package of measures to tackle the sovereign debt crisis.

  A failure to agree in principle on measures is likely to trigger a sell-off in peripheral government bonds.

  " We are not yet willing to bet on solidarity succeeding. In particular, Spain, Portugal and Belgium have large amounts of debt to refinance in March, April and May and this will be a key test of confidence in these countries," Dirk Wiedmann, chief investment officer at Rothschild Private Banking & Trust, noted.

  " Uncertainty is still as high as ever and we remain cautious. We have low allocations to eurozone bonds, with a focus on higher-quality and short-duration securities."

  Finally, investors may keep an eye on signs of a change in trend in a month which proved a turning point for three of the past 7 years. Most recently in 2009, world stocks rallied 74 percent after hitting a cycle low in mid-March.

  (Editing by Ron Askew)

  2011-03-04 19:44:53

LONDON (Reuters) - A further recovery by commodity stocks helped pull Britain's leading share index higher in early trade on Friday, with investors hoping that the latest U.S. jobs data will show the economic recovery is on track.

  By 0910 GMT, the FTSE 100 was up 36.69 points, or 0.6 percent, at 6,041.78, having rallied 1.5 percent on Thursday to end above the 6,000 for the first time since February 21.

  Heavyweight energy issues and miners led the blue-chip advance as recent worries over the impact of soaring oil prices on the economic recovery took a back seat to hopes that the U.S. jobs data will show a pickup in employment.

  " It's all about the payrolls and Wall Street's advance overnight showed that investors are pretty upbeat on the employment picture across the Atlantic," said Mic Mills, head of electronic dealing at ETX Capital.

  " Although, if there is any disappointment in the numbers, the market could quickly fall out of bed," Mills added.

  Investors betting on a big gain in U.S. payrolls pushed Wall Street to its biggest one-day rally in three months on Thursday, aided by better-than-expected initial weekly jobless claims, with Asian equities markets also pushing higher on Friday.

  The median estimate is for a gain of 185,000 U.S. jobs in February, according to economists polled by Reuters, although market sentiment was leaning toward a number above 200,000.

  OUTSOURCING REWARDS

  Outsourcing firms were in demand on Friday, with Serco a strong blue-chip riser, up 2.8 percent, after recent results as traders cited the impact of an upgrade in rating by BofA Merrill Lynch to " buy" from " neutral" .

  Serco's blue-chip peer Capita gained 3.1 percent.

  IMI was the biggest blue-chip riser, ahead 3.6 percent, having also claimed the top spot on Thursday following strong results, with positive broker comment on the engineering group.

  On the downside, WPP Group was the biggest FTSE 100 faller, down 1.7 percent, as analysts cited disappointment that strong results from the world's largest advertising firm lagged those of French rival Publicis.

  " Publicis shot the lights out with fourth-quarter organic growth of 12.5 percent, so there's relative disappointment," said Simon Baker, analyst at Credit Suisse.

  Domestic data proved a bit of a dampener to sentiment.

  British house prices fell 0.9 percent in February and by 2.8 percent in the three months to February compared with a year ago, their fastest annual pace in more than a year, mortgage lender Halifax said on Friday.

  The Halifax survey contradicted that by fellow lender Nationwide on Tuesday which said prices climbed by a seasonally adjusted 0.3 percent month-on-month, defying economists' forecasts for a fall of 0.3 percent.

  2011-03-04 18:9:27

By Mohammed Abbas

  AL-UQAYLA, Libya (Reuters) - Libyan rebels vowing " victory or death" advanced towards a major oil terminal on Friday, calling for foreign air strikes to set up a " no-fly" zone after three days of attacks by Muammar Gaddafi's warplanes.

  Eastern-based rebels told Reuters they were open to talks only on Gaddafi's exile or resignation following attacks on civilians that have provoked international condemnation, a raft of arms and economic sanctions and a war crimes probe.

  In Tripoli, opponents of Gaddafi prepared to march in the capital after prayers, but the authorities were preventing foreign media from reporting independently on the protests.

  " Victory or death ... We will not stop until we liberate all this country," Mustafa Abdel Jalil, head of the rebel National Libyan Council told supporters of a two-week-old uprising that has shaken Gaddafi's grip on the North African oil producer.

  Ahmed Jabreel, an aide to Abdel Jalil, said if there was any negotiation " it will be on one single thing -- how Gaddafi is going to leave the country or step down so we can save lives. There is nothing else to negotiate."

  Rebel volunteers defending the opposition's expanding grip on a key coast road said a rocket attack by a government warplane just missed a rebel-held eastern military base which houses a big ammunition store in the town of Ajdabiyah.

  " We're going to take it all, Ras Lanuf, Tripoli," Magdi Mohammed, an army defector, fingering the pin of a grenade, told Reuters at the rebels' front-line checkpoint.

  Western nations have called for Gaddafi to go and are considering various options including the imposition of a no-fly zone, but are wary about any offensive military involvement to stabilise the world's 12th-largest oil exporter.

  The air attacks have failed to stop the rebels using the coast road to push their front line west of Brega, an oil terminal town 800 km east of Tripoli. They said they had driven back troops loyal to Gaddafi to Ras Lanuf, site of another major oil terminal, 600 km east of Tripoli.

  Amid growing international concern about dwindling food and medical supplies in some rebel-held areas, diplomatic efforts are accelerating to end a conflict that the West fears could stir a mass refugee exodus across the Mediterranean to Europe.

  U.S. President Barack Obama said he was concerned a bloody stalemate could develop between Gaddafi and rebel forces but gave no sign of a willingness to intervene militarily.

  " Muammar Gaddafi has lost the legitimacy to lead and he must leave," Obama said, the first time he has called in public for Gaddafi to leave Libya, although he has urged his exit in written statements by the White House.

  The popular uprising against Gaddafi's 41-year rule, the bloodiest yet against a long-serving ruler in the Middle East or North Africa, has knocked out nearly 50 percent of the OPEC-member's 1.6 million barrels of oil per day output, the bedrock of its economy.

  The upheaval is causing a humanitarian crisis, especially on the Tunisian border where tens of thousands of foreign workers have fled to safety. But an organised international airlift started to relieve the human flood from Libya as word spread to refugees that planes were taking them home.

  Venezuela's President Hugo Chavez pushed a vague peace plan for Libya, saying he had spoken to his friend Gaddafi who had supported the proposal for a negotiating commission, accusing the West of eying the North African nation's oil.

  But Saif al-Islam, a son of Gaddafi, said on Thursday that Libya did not need outside help to solve its troubles.

  Rebels holding the port city of Zawiyah, 50 km west of the capital, Tripoli, said they had launched counter-attacks against Gaddafi's forces massing in the area and warned supplies of medicines and baby milk were running low.

  ASSET FREEZE

  " Women and children are at home while the men are armed and roam the streets and city limits in anticipation of a major attack by pro-Gaddafi forces," resident Ibrahim told Reuters by telephone, giving only one name.

  The Pentagon said there was evidence Gaddafi's forces were dropping ordnance but it was not clear if warplanes were bombing rebel forces.

  As international efforts progressed to isolate the Libyan leader, Austria widened an asset freeze list to include a top official at the Libyan Investment Authority, Mustafa Zarti, because of possible ties to Gaddafi's inner circle.

  In Zawiyah, residents said Gaddafi's forces had deployed in large numbers over the past days. " We estimate there are 2,000 on the southern side of town and have gathered 80 armoured vehicles from the east," resident Ibrahim said, adding a battalion had also come from the west side.

  His account could not immediately be verified.

  The government says it is not using military force to retake rebel-held cities although one official did not rule it out if all other options were exhausted.

  The International Committee of the Red Cross (ICRC) said reports indicated two Libyan Red Crescent ambulances were shot at in Misrata, west of Benghazi, and two volunteers were wounded. The ICRC has 12 staff in Benghazi including a medical team visiting areas outside the city in cooperation with the Libyan Red Crescent.

  In The Hague, International Criminal Court prosecutor Luis Moreno-Ocampo said Gaddafi and members of his inner circle could be investigated for possible war crimes committed since the uprising broke out in mid-February.

  In London, the London School of Economics said it had asked a leading legal figure to investigate its ties to Libya after its director resigned for accepting funding from a charity run by Saif al-Islam.

  Howard Davies, a former deputy governor of Britain's central bank who has also held a series of senior positions in the business world, quit late on Thursday after accepting that he had damaged the prestigious college's reputation.

  He is the first high-profile British figure to lose his job over commercial ties with Gaddafi.

  (Additional reporting by Maria Golovnina, Yvonne Bell and Chris Helgren in Tripoli, Tom Pfeiffer and Alexander Dziadosz in Benghazi, Souhail Karam and Marie-Louise Gumuchian in Rabat, Yannis Behrakis and Douglas Hamilton on Tunisia border Christian Lowe and Hamid Ould Ahmed in Algiers Writing by William Maclean Editing by Giles Elgood)

  First Published: 2011-03-04 11:25:55
Updated 2011-03-04 19:37:46