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Several large U.S. banks have set aside extra money to pay for potential legal costs in part because of JPMorgan Chase & Co's massive $13 billion settlement with U.S. authorities over bad mortgages, according to two sources familiar with the situation. The size of the JPMorgan settlement, which the government called the largest in U.S. history, led many banks to realize that the cost of resolving some of their own legal problems was likely to be higher than they had initially believed, the sources said. Justice Department officials have said in public statements they want to use the JPMorgan settlement as a template for deals with other banks. Bank of America, Citigroup, Goldman Sachs and Morgan Stanley all added hundreds of millions of dollars to funds they have set aside to pay for the cost of litigation, including legal fees, fines and settlements. All four banks are facing mortgage-related investigations by federal prosecutors located in different parts of the country.

New York Attorney General Eric Schneiderman has abandoned his effort to obtain damages from Bank of America Corp over its purchase of Merrill Lynch & Co, but plans to press on with the case, his lawyers said in court on Friday. Schneiderman will seek to bar the bank's former chief executive, Kenneth Lewis, and former chief financial officer, Joe Price, from the securities industry and from serving on boards of public companies, according to his office. It was not clear what sanctions he would seek from the bank. The 2010 lawsuit filed in New York state court by Schneiderman's predecessor, Andrew Cuomo, accused Bank of America of misleading shareholders about Merrill's losses and bonus largesse prior to a December 2008 vote on the merger. Merrill posted a $15.84 billion loss in the fourth quarter of that year, even as it paid out $3.62 billion in bonuses. The merger closed in January 2009. Last April, a federal judge approved a $2.43 billion class-action settlement

The initial reads on earnings have been mixed, and yet U.S. stocks are hovering near all-time highs. Next week, investors will see whether the first companies out of the gate were a harbinger of what's to come. More than 60 S&P 500 companies are scheduled to release results next week, including more than half a dozen Dow components. The reports will give the fullest picture yet of how corporations are faring and whether the market can advance further as Fed stimulus begins to recede. "Given that equities are fully valued and arguably overvalued, we need earnings and revenue to come through to support the gains we've already made," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. "There's a reasonable chance we could see a 10 percent correction in the event we get some high-profile disappointments." Earnings for S&P 500 companies are seen rising 7 percent in the quarter, down from the 7.6 percent rate that had been

China's home prices continued to surge in December, though the pace of gains overall did not exceed the previous month's and rises eased in some major cities, suggesting that government tightening measures may be starting to bite. _0"> Home prices in many Chinese cities have continued to set records in the past year despite a four-year long government campaign to cool the market, adding to the threat of a price bubble and forcing some local governments into a fresh round of curbs in November. Average new home prices in 70 major Chinese cities climbed 0.4 percent in December on the month, easing from November's 0.5 percent and the fourth straight slowdown since August's 0.8 percent gain, according to Reuters calculations from data released by the National Bureau of Statistics (NBS) on Saturday. "The slower home price gains in December showed recent curbs unveiled by local governments in tier-1 and some tier-2 cities have started to stabilize market expe

In early 2011, Morgan Stanley Chief Executive James Gorman thought he had finally figured out how to rebuild the bank's depleted bond trading business without taking too much risk. He hired traders from rivals in areas where the bank was relatively weak, such as trading government debt, and exhorted his sales staff to gain new clients and win more trades from existing customers. On Friday, after three years of spotty results, Gorman flipped the script, announcing a new strategy for fixing the operation: shrinking and taking less risk. It is at least the fourth time the bank has tried to retool the business since the financial crisis. Rivals and some analysts are skeptical that Gorman has it right this time. "Whether banks can really compete and be profitable on a smaller scale - that's the million dollar question," said Lisa Kwasnowski, an analyst at the bond ratings firm DBRS who is supportive of Gorman's plan. Bond trading - including fixed income, curren

Spinning off the clean-up project at Japan's wrecked Fukushima nuclear plant from the rest of operator Tokyo Electric Power's business could be an option in the future if the decommissioning runs smoothly, the company's president said. Nearly three years after a devastating earthquake and tsunami hit the plant, Tokyo Electric (Tepco) is still struggling to contain radioactive water at the site and turn around its battered finances. "Paying compensation (to evacuees), decontamination, and the work at the Fukushima plant; there is a lot of work to be done ... We have to continue doing this, while maintaining the workers' safety, their sense of responsibility, duty and keeping up their morale," said Naomi Hirose in an interview with Reuters on Saturday. Hirose said if working conditions improve significantly at Fukushima and worker shortages become no longer a problem, the utility could consider hiving off the Fukushima decommissioning from the rest of the b

Vattenfall unplugged! With flyers, posters and an animated film of a bear disconnecting the Swedish utility that operates the Berlin electricity grid, campaigners tried to convince voters to put power distribution back in public hands. The November referendum in Berlin failed, but in September, citizens of Hamburg, Germany's second-biggest city, voted to return their power grid, also run by Vattenfall, to public ownership. The votes were organized by citizens' groups who want municipalities to buy back electricity distribution networks from private utilities, because they say local authorities can provide a cheaper and better service. The German movement is part of a Europe-wide reversal of the trends towards liberalization and privatization that have driven energy policy in the past decade. While ostensibly backing free energy markets, many European governments squeeze utilities by intervening in power generation while also capping energy prices. This creeping renational