(Reuters) – When Groupon Inc filed its plan to go public with U.S. regulators in June, Chief Executive Andrew Mason proclaimed in a letter to prospective shareholders that "life is too short to be a boring company."

In the months that followed, the daily deals website, which offers discount coupons for local shops and services, was anything but boring as a series of blunders threatened its initial public offering.

Groupon changed its accounting twice under pressure from regulators, lost its chief operating officer, and faced questions over whether CEO Andrew Mason was too unpredictable for Wall Street after a sensitive internal memo was leaked.

"Not boring and bordering on insane," said Scott Sweet of research firm IPO Boutique. "I've done more than 10,000 IPOs and secondary offerings over 39 years and this one is up there among the most tortured."

Amid plunging stock markets, Groupon delayed the IPO in September, then it slashed the size and valuation before embarking on a roadshow last month to woo investors.

Groupon finally debuted on Nasdaq on Friday. A tiny 5.5 percent flotation helped shares jump more than 30 percent, valuing the company at nearly $17 billion.

That scarcity helped Groupon get the deal done but analysts warned the stock could come under pressure down the road, if venture capital investors try to sell their holdings, or the company runs into bumps on the road to profitability.

Earlier this year, before Groupon filed to go public, one such venture capitalist tried to persuade Mason to wait. The European debt crisis loomed and valuations of publicly traded technology companies were depressed, the investor argued.

Moreover, Groupon's subscriber growth was impressive but it was still losing lots of money. New rivals were emerging and Groupon's efforts to diversify were just getting started, the investor said.

The theory was that if Groupon waited, its business would mature and losses would decline, increasing its appeal to more-conservative Wall Street investors. If Groupon went ahead but had to pull the offering, it would take a long time to recover from the fiasco.

Mason, 31, listened but forged ahead anyway.

"Andrew listens a lot and takes everything in and is great with numbers and data. But they made their own decision to go public," said the investor, who did not want to be identified because deliberations over financing options were private.

On June 2, Groupon filed its IPO prospectus with U.S. regulators and listed Morgan Stanley, Goldman Sachs and Credit Suisse as the banks that would lead the offering.

SHAREHOLDER LIMIT

Interviews with dozens of people involved in the IPO — including bankers, investors, current and former employees — paint a picture of the excruciating path Groupon took to become the first daily deals site to go public in the United States.

One of the reasons Groupon was keen to go public was that its board of directors realized the company would soon have too many shareholders to remain private — after various rounds of financing and amid active private trading of pre-IPO shares.

The U.S. Securities and Exchange Commission requires a company with more than $10 million in assets and equity held by 500 or more individuals to publicly disclose its financials.

Mason also wanted to get the IPO done before his fall wedding to "dream-pop" musician Jenny Gillespie.

In late May, Groupon's board considered stock market conditions receptive for an IPO, with the tech-heavy Nasdaq Composite Index close to its year high, according to a person familiar with the company.

Groupon could also use proceeds to fund future growth in a nascent industry that was nonetheless rapidly consolidating, the person added, speaking on condition of anonymity.

The ultimate decision was made by the board, comprising Mason, Chairman Eric Lefkofsky, MediaBank Founder Brad Keywell, Peter Barris of venture capital firm New Enterprise Associates, Kevin Efrusy of Accel Partners, Mellody Hobson of asset manager Ariel Investments, former AOL executive Ted Leonsis and Starbucks founder Howard Schultz.

In discussions with bankers, Groupon was hoping for an IPO valuation of more than $20 billion, far above the $6 billion that Google Inc offered for the company in late 2010.

But then over the summer, the European debt crisis worsened, the United States lost its triple-A credit rating, and equity markets went into a tailspin.

Increasingly cautious investors began to pick through Groupon's public financial statements, poking holes into what had been viewed as the fastest-growing Web start-up in history.

DUBIOUS METRICS

Wall Street became increasingly concerned about Groupon's business model. The daily deals market was growing fast but it was also getting very crowded, with many deep-pocketed rivals including Google, Amazon.com Inc and AT&T Inc.

Groupon was still the market leader, but investors found cracks in its facade.

In particular, they focused on its use of a controversial accounting metric called Adjusted Consolidated Segment Operating Income (ACSOI), which excluded marketing expenses, stock-based compensation and acquisition items.

For example, Groupon reported ACSOI of almost $82 million for the first quarter, after stripping out some $180 million of expenses. Groupon's IPO underwriters saw red flags, and expected a pushback from securities regulators.

"We laughed. We knew the SEC was going to puke all over it but there was a big group of advisers and the company wanted to do it," one equity capital markets banker said.

Groupon later abandoned ACSOI under pressure from the SEC.

Beyond the accounting, investors were also concerned about whether Groupon's rapid growth rate was slowing. In the second quarter, sequential revenue growth had slowed to 36 percent, from the first quarter's 63 percent.

By the time Groupon disclosed third-quarter results, it had changed how it reported revenue to exclude the cut it gives merchants. On this basis, revenue rose less than 10 percent from the second quarter.

At a board meeting in late August, Groupon's directors questioned Mason, Chief Financial Officer Jason Child and then-Chief Operating Officer Margo Georgiadis about the revenue hiccups, according to a former employee.

The three executives were asked to take the directors through an early draft of the IPO roadshow slides. The feeling among some of the directors was that they stumbled through the presentation and were not ready, the former employee said.

This was the first time the roadshow was presented to the board and the directors critiqued it because they wanted to make sure the executives got it right, long before they started to pitch investors, a source close to the board said.

Mason, a former music-studies major known for pranks and jokes, came under enormous pressure and became much more serious around this time, according to the ex-employee.

In early September, Groupon put its IPO on hold. Then, Georgiadis left for Google, the second COO to depart this year. She said Groupon was on a "terrific path" but her exit added to a sense of turmoil at a crucial time.

TURNING POINT

Groupon, which declined to comment on the board meeting or on private discussions with investors, was nonetheless still determined to pursue a public listing.

Mason was frustrated that he could not respond publicly to Groupon's many critics because of SEC rules limiting promotion of IPOs ahead of the listing.

He tested the limits of SEC rules when he wrote a memo to employees in August, lashing out at Groupon critics and divulging new financial information. He pinpointed a media story that asked whether Groupon was running out of cash.

"With this article, the degree to which we're getting the shit kicked out of us in the press had finally crossed the threshold from 'annoying' to 'hilarious,'" Mason wrote in the memo that was leaked and widely reported in the press.

"While we've bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it's important to me that you have the context necessary to brush this stuff off," he wrote.

Around this time, a top underwriter on the IPO mentioned the idea of scaling back the IPO to Lefkofsky, Groupon's chairman. The move would help Groupon get on the road more quickly, letting it answer critics, the banker said.

The turning point came in October, when Groupon announced that it was shrinking its IPO and nearly halving the valuation. Existing shareholders agreed not to sell, and the IPO would raise about $540 million, instead of $750 million, and value the company at about $11 billion.

Mason and the executive team polished their presentations and hit the road on Oct 25, crisscrossing America to visit investors in Baltimore, Washington D.C., Boston, New York, San Francisco, Denver, Los Angeles and Chicago.

Michael Moe, head of GSV Capital Corp, which invested in Groupon in August, gave credit to the company for fighting its way out of a negative news cycle.

"The smart thing was to get out on the road and start telling their story," Moe told Reuters. "They put a price on the cover that put fans in the stands. Then they let the market price it. Putting too high a price would have dissuaded investors from considering it properly."

Several money managers said they were impressed by Mason's charm offensive. One fund manager described the CEO as composed, confident and articulate, "He was as presidential as a thirty-year-old can be."

DEBUT STRONG, OUTLOOK LESS CERTAIN

On Thursday, Groupon priced its IPO at $20 a share, above the targeted range of $16 to $18, and increased the issue to 35 million shares from 30 million. The IPO raised at least $700 million and valued the company at almost $13 billion.

If the underwriters exercise their option to buy more stock, Groupon will raise over $800 million, before fees.

The IPO is the largest from a U.S. Internet company since Google raised $1.7 billion in 2004.

But in terms of the percentage of shares sold, the IPO is one of the smallest floats of the past decade. That could pressure Groupon shares in coming months, analysts said, citing concerns about additional share sales.

"Much of this pop is based on the low float," said Michael Yoshikami head of money-management firm YCMNET Investment Committee. "We continue to be concerned about Groupon's model, especially given the low barrier for entry into this space."

"I expect this stock to come back from its price and settle near $15," he added. "Above that seems too frothy for me."

(Reporting by Alistair Barr, Clare Baldwin and Sarah McBride, editing by Tiffany Wu, Bernard Orr)

BRUSSELS (Reuters) – Deutsche Boerse AG sought to convince EU regulators to judge its bid for NYSE Euronext by assessing over-the-counter derivatives trading and not only its impact on the smaller exchange-listed market, in its bid to win clearance for the deal.

The European Commission is reviewing the $9 billion transaction only in terms of the exchange-listed market, sources have told Reuters. Securing EU regulatory approval is seen as the biggest hurdle for the operators, whose combination would create the world's largest exchange operator.

The narrower market underlines the impact of the combination, which would have more than 90 percent of the trade in exchange-listed futures in Europe, and has put pressure on the operators to offer significant concessions to secure regulatory approval for the deal.

Andreas Preuss, chief executive of Deutsche Boerse's Eurex derivatives unit, attended a closed-door hearing with regulators in Brussels on Thursday, urging them to take the broader view.

"Today, we have pointed out that the derivatives market is a global market dominated by OTC (over-the-counter) trading," he said in a statement.

"OTC volumes are substantially bigger than exchange-traded volumes — OTC markets are a direct competitor to regulated markets that stand for transparency and effective risk management in derivatives trading," he said.

Preuss said the combination of the operators' Eurex and Liffe derivatives operations would increase transparency and risk management in derivatives trading.

Regulators by contrast have warned the exchange operators of the near-monopoly both in existing and future products from the combined group, in a statement of objections or charge sheet sent to them on October 5, according to a person who has seen the document.

NO SUBSTITUTION

Regulators are also concerned that rival derivatives platforms may not be able to enter the market if they do not get access to the merged operator's post-trade clearing facilities, the person said.

That document also outlined the Commission's reasons for assessing the deal only in terms of exchanged-listed futures trade (ETD).

"The market investigation revealed that, depending on the category of customers, there is either no substitution between highly standardized ETD contracts or OTC contracts, or that such substitution may be limited to a small category of contract," the source said, citing the document.

Regulators pointed to a "distinguishable group of customers that have no mandates to trade OTC derivatives and hence for whom OTC derivatives are not alternatives," the person said.

NYSE Euronext Chief Executive Duncan Niederauer and Deutsche Boerse CEO Reto Francioni were also in Brussels for the hearing.

The Commission is scheduled to decide by December 22 whether to clear the deal.

Guillaume Loriot, the deputy head of EU Competition Commissioner Joaquin Almunia's cabinet, and Eliana Garces Tolon, another cabinet member in charge of financial issues, led the Commission team at the hearing.

Other participants included Bernd Langeheine, deputy director general for mergers at the Commission, Nick Banasevic, who is handling the case and Commission lawyers.

Representatives from Germany, France, Britain, Spain, Sweden, Finland, the Netherlands, Belgium, Italy and Ireland were present at the hearing.

The London Stock Exchange and its Turquoise trading platform, Nasdaq, Euroclear, ICAP, Chi-X — the largest pan-European platform — Bank of New York Mellon and bank lobbying group the Association for Financial Markets in Europe also sent representatives to the hearing, which continues on Friday.

(Additional reporting by Edward Taylor in Frankfurt; Editing by Rex Merrifield and David Holmes)

NEW YORK (Reuters) – The S&P 500 entered bear market territory after the open on Tuesday, down over 20 percent from its 2011 high, as European officials considered making banks take bigger losses on Greek debt and fears of contagion in the world's financial system grew.

COMMENTS:

WILLIAM LARKIN, FIXED INCOME PORTFOLIO MANAGER, CABOT MONEY MANAGEMENT, SALEM, MASSACHUSETTS:

"My take on it is that Europe, from a leadership standpoint, is looking a little more unstable, so you've got that feeding in, and we are also coming into earnings season. There are a lot of excuses to disappoint, and guidance going forward is going to be very challenging, which means that a lot of the valuations are likely to get dinged in here. From that standpoint, why not raise some cash, be more defensive going into that. It is too much of a headwind.

We are going to see lower (Treasuries) yields if it is possible. If you had asked me a year ago that yields would get this low I would say that you are crazy. 2.72 percent on the 30-year? That is beyond my comprehension.

Cash looks great. Right now you have to be very careful."

MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BNY MELLON, NEW YORK

"There are two separate issues here. Are financial markets pricing in more risk and uncertainty? Yes, no question. Will things get worse before they get better? Yes. The same pattern we've been seeing of people allocating away from stocks and toward cash and bonds should continue until a Greek resolution is in place. That's the most important issue. But this does not imply a double-dip recession in the United States. There is stimulus in the pipeline here that should help maintain growth in the future despite all these ongoing debt difficulties. A double-dip scenario in Europe is also unlikely given continued export-led growth in Germany."

SAID JOSEPH TREVISANI, CHIEF MARKET ANALYST, FX SOLUTIONS, SADDLE RIVER, NEW JERSEY

"The dollar gets stronger, there are more safe haven flows. Nobody is going to dollar assets for return, just for safety."

LINDSAY PIEGZA, ECONOMIST, FTN FINANCIAL, NEW YORK

"We saw a lot of back and forth between the U.S. and China about this impending trade war. Just the fact that we're going back and forth over raising further barriers to growth is causing anxiety.

"Another factor is Dexia — the Belgian bank coming under structural problems and needing to get bailed out. The European banking community is continuing to hold this unsavory debt on their balance sheets and they continue to try to work through that.

"More and more analysts in the U.S. are suggesting that there is no solution to the European problem and they're just pushing the problem down the road.

"If we do see a European recession that would be very very bad for the equity markets. That will dampen global growth prospects."

ERIC GREEN, SENIOR PORTFOLIO MANAGER AND DIRECTOR OF RESEARCH AT PENN CAPITAL MANAGEMENT IN PHILADELPHIA, WHICH OVERSEES $6.5 BILLION

"The bear market is just a number that the media likes to use; I don't see people changing strategies because of it. It feels like we're getting oversold, but the weakness has persisted a lot longer than people were anticipating."

TORONTO (Reuters) – The London Stock Exchange has sweetened its friendly offer for the TMX Group with an enhanced dividend, bringing the value to $4.1 billion for the operator of the Toronto Stock Exchange.

LSE added a cash component in the form of C$4 dividend per share to TMX shareholders, while LSE shareholders will receive 84.1 pence per ordinary share, sweetening the bid by C$660 million ($680 million).

CHRIS DAMAS, INDEPENDENT ANALYST, TMX SHAREHOLDER

“The special dividend is a carrot. The TMX’s balance sheet was unleveraged before this deal and the deal was going to reduce the LSE’s leverage. … This dividend will now increase the leverage, effectively by paying cash from the TMX’s unleveraged balance sheet. … It’s a carrot, but you can’t make more value for shareholders by moving the financial shells around.

“To get the dividend you have to hang in there until the day before they complete the merger and it doesn’t remove any of the regulatory risk. We are voting on a deal, which will be a done deal, if shareholders vote positively and yet we still have all the regulatory risk.

“What I suggest is cash up front, not cash the day before a hypothetical closing date in the fall.

“These valuations are around 11 to 12 times earnings. And the Deutsche Bourse-NYSE deal, which is being voted on July 7, is more like 13, or 14 times. So these multiples are still pretty low for a stock that has provided a 400 percent return.”

ALLISON CROSTHWAIT, DIRECTOR GLOBAL TRADING STRATEGY, INSTINET

“I’m not surprised at all. I expected this. They certainly needed to do this in order to win the vote on the 30th. And I think the price is about right. Probably. They bested the Maple deal by almost a dollar. I see it right now being worth $48.94.

“I don’t think the case is made strongly enough for TMX-London — they sort of rolled over, to some degree. I would just like to see more aggression as to why this is a really good thing — I mean, you sell me on it. Everybody has gone with this fuzzy feel-good about Canadian control — what does that mean?

“It’s a true sweetener, it was needed, because ultimately shareholders — they’re pecuniary — they’re motivated by their own investment return. … I think this makes a much stronger case for the LSE and much higher probability it will be accepted on the 30th.

“There’s all the regulatory hurdles of course. The shareholders has to make this strange determination without having the regulatory information. So if they believed the regulatory environment is going to favor the Maple deal, that could sway things in favor of the Maple deal. We’ll see, but right now everybody’s saying it’ll be the LSE.”

“Any comment that I’ve seen has said that LSE is more likely from a regulatory perspective. That could shift in two seconds if somebody really influential comes out and says, “no, LSE is not going to pass the net benefit test and this is not a competitive issue”, but I think it is a competitive issue.

THOMAS CALDWELL, CHAIRMAN, CALDWELL SECURITIES

“The thing that would impress me more in the longer term is that they are maintaining the same dividend yield basis on this company, so that’s a positive.

“Giving back some of our own money, that’s also positive – it’ll give you some cash, so that means, let’s look at the stock and say C$44.20, so I get C$4 back, so it’s C$40.20, combined company — it’s probably worth that, I would think.

“There is a speculative premium here and they are trying to match the speculative premium with some cash up front. On the Maple deal, I end up with some cash … and end up with Maple shares, which is a company controlled by its customers, and therefore, what pricing power do you have? And how are they going to value Alpha when they roll it in there?

“I think Wellington used the phrase at Waterloo that it was a close-run thing, and that phrase is probably going to be applicable here — this is a close run deal.

“I think the other side are going to come back with something more, something different and something more clarified.

“I believe markets should be neutral. A market should not be controlled by the biggest proprietary traders and the biggest internalizers of their own trades — that is they take the other side of the client order — because the most important thing an exchange does is determine the price of a trade, the price discovery.”

MATHIEU ROY, VICE PRESIDENT, LOUISBURG INVESTMENTS

“As a TMX shareholder, I’m certainly happy to see the offer being sweetened just before we have to go and vote.

“One part of the equations where I think it’s going to be difficult to make up your mind today is that I think the market was valuing the LSE as if the LSE-TMX merger wasn’t going to happen.

“So I wasn’t really believing that if you took the 2.9 shares and then applied it and that’s what TMX would be trading at today.

“With them sweetening the bid and potentially increasing their chances of winning it, or at least getting shareholder approval, I’m curious to see how the LSE will trade when it opens up again, and if it trades off, then even with the $4 dividend, perhaps it still won’t be enough to get you to the $48 stated by Maple Group.

I guess my first impression is I’m happy to see a bidding war and I’m open-minded, but I want to see how the LSE trades and I’m still a little more intrigued by the Maple bid.

HONG KONG (Reuters) – The U.S. dollar plumbed a near 3-year low against other major currencies on Wednesday before a Federal Reserve decision, which is expected to reinforce an ultra-easy policy stance and drive more capital to buoyant emerging Asian stock markets.

While Fed chairman Ben Bernanke is expected to paint a cautious picture on the world’s largest economy, Asian and Latin American central banks by contrast are still tightening monetary policy and some are using currency appreciation to check price pressures.

The European Central Bank raised its policy rate this month for the first time since mid-2008 and is expected to raise rates at least once more this year.

That has given new legs to the “carry trade”, in which investors borrow in a low-yielding currency to invest in higher-yielding assets or currencies.

Investors have been snapping up the high-yielding Australian dollar and South Korean shares (.KS11), while showing heavy interest in Indonesia’s upcoming dollar bond.

Market players also added to bearish dollar bets, especially against the euro and the Swiss Franc, on expectations the Fed will cling to a near-zero interest rate policy even as it lets a $600 billion bond purchase program wind down in June.

“Focus will be on the inaugural press conference and whether Bernanke is shifting along the dove-hawk scale,” said Michael Sneyd, analyst at Societe Generale.

“Attention will also be on comments for how the Fed may respond to U.S. fiscal tightening. All-in-all, the meeting is likely to give the green light for risk appetite and for dollar bears to continue to be bearish.”

The dollar index (.DXY), which tracks its performance against a basket of major currencies, hit the lowest since August 2008 at 73.483, before cutting some losses.

FLOWS PICK UP

Asian shares rose after robust gains posted by U.S. indices overnight, driven by better-than-expected performances from U.S. corporate heavyweights. U.S. stock futures rose 0.1 percent, suggesting a higher open on Wall Street.

South Korea’s benchmark KOSPI index (.KSII) rose to a record high for the third consecutive session before giving back some gains as investors took profits on automaker shares. It ended flat. Hong Kong shares (.HSI) rose, boosted by a broad rally in financials ahead of results from Chinese banks.

MSCI’s index of Asia Pacific shares outside Japan (.MIAPJ0000PUS) rose to its highest level since January 2008, and was up 0.5 percent on the day.

Japan’s Nikkei (.N225) closed up 1.4 percent, supported by rebounding shares of large exporters. But it could face downward pressure after ratings agency Standard & Poor’s revised its outlook on Japan’s sovereign debt to negative.

Offshore flows into non-developed Asian markets have picked up after a January slump, with both emerging markets equity and bond fund groups extending their longest inflow streaks since mid-January, according to fund tracker EPFR Global.

The order book for Indonesia’s eagerly awaited 10-year dollar-denominated bond has grown to around $5 billion for an issue expected to be between $1 billion to $1.5 billion in size, IFR said. Indonesia’s markets have been a favorite among global investors because of the country’s relatively high yields, decent economic growth and demographics.

China let the yuan rise to a post-2005 revaluation high, triggering gains in emerging Asian currencies.

Helping the case of carry trades, the Australian dollar shot to a new 29-year peak above the $1.0800 per U.S. dollar after higher-than-expected first quarter inflation suggested the central bank will eventually have to resume tightening.

SILVER PULLBACK

The dollar’s woes have been further compounded by a recent drop in U.S. Treasury yields as rate traders bet that any Fed tightening would be a slow and gradual process.

In Asian time, the U.S. 10-year note yield was at 3.32 percent, just above a one-month low of 3.31 percent before the Fed decision. Ten-year yields are down by about 30 basis points since this month’s highs.

In commodity markets, spot silver bounced 0.9 percent to around $46 per ounce level after falling by nearly 5 percent overnight. High volatility and the expiry of U.S. silver options added to the intensity of the decline of the precious metal.

Despite the sharp pullback in silver which rippled over into other commodities, Brent held above the $124 per barrel line, as Libya’s civil war and violence-tinged unrest Syria and Yemen helped limit bearish sentiment on a price slide.

LONDON (Reuters) – Nasdaq OMX and IntercontinentalExchange have launched a rival bid to buy NYSE Euronext for about $11.3 billion in cash and shares.

The offer is valued at $42.50 per share, a premium of 19 percent to the price proposed by Deutsche Boerse, the companies said in a joint statement.

MARKET REACTION

By 1208 GMT NYSE Euronext shares in Paris were up 11.4 percent at 27.65 euros ($39.14), while shares in Nasdaq OMX and IntercontinentalExchange traded in Frankfurt slipped 0.1 and 1 percent respectively. Deutsche Boerse was down 1.8 percent at 52.56 euros. Shares in the London Stock Exchange, a former bid target for Deutsche Boerse, were up 3 percent at 855.5 pence.

MARKET COMMENTS

ANDREW GIBSON, HEAD OF RESEARCH, GALVAN, TRURO

“I’m skeptical about whether Deutsche Boerse will launch a counterbid, but I wouldn’t be surprised to see ICAP getting into the fray. Deals in derivatives are getting pushed onto exchanges and these are becoming much more important sources of revenues. I think we may see an off-exchange and bourse operator getting together.”

CHRISTIAN MUSCHICK, ANALYST AT SILVIA QUANDT & CIE AG, FRANKFURT

“Of course, this is bad at first for Deutsche Boerse. I hope there won’t be a big premium. Otherwise, it’d be better to go alone. The deal (now proposed by NASDAQ/ICE) in my opinion is only modestly attractive for NYSE shareholders since the cash-component is only of minor importance while the strategic reasoning is not convincing.

“For NASDAQ shareholders, too, this isn’t good news since NASDAQ has to take on a lot of debt and synergies should be limited due to regulation. ICE, however, would clearly benefit, even though the price is high.”

JOERG RAHN, CHIEF INVESTMENT OFFICER, MARCARD, STEIN & CO, HAMBURG

“Both future scenarios for Deutsche Boerse look bad: the first would be to raise its offer for NYSE, which would mean spending more cash. The other scenario, dropping out of the deal, would be bad too but maybe less so than the first one. Yes, you would have a strategic disadvantage but in the long term it could open up other options for Deutsche Boerse in the exchange consolidation drive.”

ROLAND PFAENDER, ANALYST, COMMERZBANK, FRANKFURT

“The counter-offer has a cash component, rather than offering shares, and that’s already attractive in itself. Then the price too is higher. And Deutsche Boerse is now under pressure to come back with something. But it’s not a foregone conclusion that they will make a counteroffer.”

KARL MORRIS , ANALYST, KEEFE BRUYETTE & WOODS, LONDON

“I’m a but surprised, though it’s been rumored for some time. It’s quite a bold move from Nasdaq and ICE. Certainly I think the premium they’re paying is quite high. It makes you wonder what Deutsche Boerse is going to do about this and I struggle to see how they can lift their bid to match, given that when their deal was announced, there was a feeling they were giving too much away.”

MANOJ LADWA, SENIOR TRADER, ETX CAPITAL, LONDON

“It looks like an easier deal to do. There are no sovereignty issues as there were with the Deutsche Boerse deal, it’s at a hefty premium and there’s cash as well as shares, so it looks more attractive. At first glance it doesn’t look like Deutsche Boerse will come back.”

HARRY SEBAG, HEAD OF SALES TRADING, SAXO BANQUE, PARIS

“That’s a big surprise, and a negative one for Deutsche Boerse. A counter-bid 19 percent higher will be very, very hard to beat. It will also create a lot of waves in the sector, and everyone will have to rethink valuation for all the players. For the broad market, it’s always good to see such a fierce M&A battle.”

(Reporting by Blaise Robinson in Paris, Simon Falush and Brian Gorman in London, Christoph Steitz and Kirsti Knolle in Frankfurt; Compiled by Dominic Lau; Editing by Greg Mahlich)

($1=.7065 euros)

MOSCOW (Reuters) – Russian stock markets and the ruble weakened on Monday after news that at least 31 people were killed and more than 100 injured in a suicide bomb blast at Russia’s biggest airport Domodedovo.

Below is a selection of comments about the attack:

CHRIS YATES, BRITISH AVIATION SECURITY CONSULTANT

“If this happened at the international baggage reclaim, that suggests this device was taken in by someone working within the airport or with a security badge.”

“If this was in domestic baggage reclaim, then it could be different. At an awful lot of airports, there’s no great checks at domestic reclaim. You just take your bag off the carousel and wander out. People can just walk in off the street.

SAMANTHA WOLREICH, SENIOR RISK CONSULTANT, AKE LTD

“The suspected suicide blast … raises significant concerns about the internal security measures currently in place at all Russian transport hubs. This topic is particularly timely following the official designation of Russia as the host nation for the 2018 FIFA World Cup, and calls in to question the Russian government’s ability to safeguard its own citizens, as well as international visitors.”

“This appears to be a well co-ordinated and planned attack, indicating it was carried out by a group with significant funding, potentially coming from outside Russia. The identity of the bomber(s) is yet to be confirmed, but this could corroborate links between Caucasus-based insurgents and international terror groups which have as yet remained somewhat unsubstantiated.

“In the short-term security measures at all transport hubs will be visibly stepped up, whilst President Medvedev and Prime Minister Putin will seek to reassure the nation and international observers with hard-line and frank rhetoric vowing retribution against those responsible. This could take the form of reinvigorated military or FSB action in the North Caucasus, which in the mid- to long term will exacerbate existing inter-ethnic tensions. Security for all international events, such as Sochi 2014 and the Asian Winter Games in Kazakhstan later this month will also be subject to greater scrutiny.”

BRIAN GLYN WILLIAMS, ASSOCIATE PROFESSOR OF ISLAMIC HISTORY,

UNIVERSITY OF MASSACHUSETTS AT DARTMOUTH.

“This has all the hallmarks of north Caucasus-based terrorism. Dagestan is increasingly the epicenter of violence in the north Caucasus.

“This will certainly exacerbate tensions between ethnic Russians and peoples of Caucasian descent living in Moscow and other locales in Russia.”

“Russian ultra-nationalist groups may well scapegoat people with Caucasian backgrounds.

“As for Russian security measures there is not much they can do … They are already waging a proxy war in Chechnya and using local police forces to fight terrorism in Dagestan, Kabardino-Balkaria, Ingushetia etc.

“I believe this bombing is an effort to remind the Russian people and the world that the war in the Caucasus is far from over.”

TEYMUR HUSEYNOV, HEAD OF EURASIA DESK, EXCLUSIVE ANALYSIS

“There is lax security at the arrivals gate so you can easily park your car or take a train to the airport and enter. There is no limitation on the entry of people who are meeting those arriving.”

“They are approaching the election period in Russia — in December 2011 parliamentary elections and in March 2012 presidential elections — so different insurgent groups, many of whom are not necessarily coordinated with each other apart from the loosely coordinated Caucasus emirate, are likely to attempt to undertake such attacks in order to damage the image of the state and especially the image and reputation of the prime minister and the security services.”

“The confrontation between the slavic and ethnic Caucasian communities is exactly the kind of event this kind of terrorist action can lead to.

If we continue on this trend we are definitely likely to see more attempts by these groups to strike key Moscow assets. It’s difficult to do it (stage attacks) in central Moscow, apart from soft transport assets, but it’s easier to do it against the airport.”

JUSTIN CRUMP, CEO, SIBYLLINE SECURITY CONSULTANCY

“This was almost certainly the Islamic Emirate of the Caucasus. We’ve seen before how terrorists have attacked Russian aviation by bribing their way on board, something that’s very possible on internal flights in Russia”

GLEN HOWARD, PRESIDENT OF U.S. JAMESTOWN FOUNDATION RESEARCH

INSTITUTION

“The recent riots in December by Russian nationalists at Manezkha Square have created a dangerous environment in Moscow whereby Putin is seen backing the nationalists, while the peoples of the North Caucasus feel that Moscow is taking sides by backing the nationalists.”

“The attacks in Moscow are going to further exacerbate the tensions created by the right wing demonstrations in Moscow and may result in further pogroms against people from the North Caucasus.

“It does not forebode well for Russian ties to the North Caucasus and is yet another sign that what Putin started in 1999 by invading the rebellious republic of Chechnya has come home to roost again in the Russian capital.

“The bomb blast at Domodedovo will further strengthen the view among the Russian elite that Putin is losing control over security in the capital, which plays into the hands of his enemies, who I am sure you can now count as (dismissed Moscow mayor Yuri) Luzhkov and others.”

PAUL ROGERS, PROFESSOR OF PEACE STUDIES, UNIVERSITY OF

BRADFORD, UK

“As to the likely suspects, one would have to say Caucasus, mostly likely Chechen-connected. There is a secondary possibility of a criminal network, ie some sort of extortion. That’s a possibility, but lower down the list.”

MATTHEW CLEMENTS, IHS JANE’S EURASIA ANALYST

“From initial reports it seems to have been a suicide bomber. Based on that, I would say the attack is almost certainly going to be associated with militants operating from the North Caucasus. This would be in line with their tactics and strategy, and civilians at airports would be a prime target in that strategy.”

ALEXEY SUROV, TRADER, BANK ZENIT

“Based on previous experience with the Russian market falling after terrorists attacks, I don’t think the market will stay down on the news for more than several days.

Aeroflot shares are down because investors are afraid the company’s revenue will go down, as strengthened security measures will lead to fewer flights and fewer people flying to and out of Moscow.”

JOHN WINSELL DAVIES, LEAD FUND PARTNER, WERMUTH ASSET

MANAGEMENT

“The Russian RTS (index) traded higher just five days after the Nord Ost hostage crisis. The RTS straight-line rallied 7.5 percent in the month of September following the Beslan school tragedy. Moscow does not believe in tears.”

ZSOLT PAPP, UBP ASSET MANAGEMENT, ZURICH

“I don’t think any major investor will be deterred by a bomb attack from investing in any major Russian company. Russia is politically a stable country, remarkably stable, and other factors such as the oil price, play a much bigger role. For the kind of privatization that the government is lining up — medium to long-term players — I don’t think this will have an impact.”

YEVGENY GONTMAKHER, INSTITUTE OF MODERN DEVELOPMENT

“This tragic event will in no way influence Russia’s business climate, which is (already) unfavorable. The business climate is determined by more stable circumstances such as corruption and state interference with business, not by one-off events like this”

ALEXEI BACHYURIN, TRADER, RENAISSANCE CAPITAL

“It (the blast) is moving the market in the short term, but there is no fundamental reason for the market to fall. If you remember, the market didn’t react strongly to (previous blasts).

YAROSLAV LISSOVOLIK, CHIEF STRATEGIST, DEUTSCHE BANK

“I don’t think there will be a long term effect… We are already seeing some negative impact (on markets), but in the long run there will increased safety measures on flights and in airports. Gradually this negative impact will disappear, as we saw in past episodes of such events.”

VLADIMIR BRAGIN, ANALYST, ALFA BANK

“The blast, and the measures the government undertakes, will affect everything: first the transport industry, then infrastructure as a whole, which will in turn affect the oil sector. Additional security measures that may be introduced will probably scare some investors.”

ILYA MAKAROV, ANALYST, ATON

“The market reaction was negative. We had fallen by 1.3 percent (before the blast), and now by around 2.2 percent. The market was down because of Sberbank and Aeroflot, which are both state companies and always react first on such news. There are a lot of emotions.”

(Reporting by Moscow Newsroom)

MOSCOW (Reuters) – Russian stock markets and the ruble weakened on Monday after news that at least 31 people were killed and more than 100 injured in a suicide bomb blast at Russia’s biggest airport Domodedovo.

Below is a selection of comments about the investment implications of the incident:

ROLAND NASH, VERNO CAPITAL

“It is the terrible reality of our generation, and one to which Russia is as susceptible as any country globally. I’m sure it will have a short-term impact on business travel, but it is, unfortunately, not something new. Maybe some people will link it to the upcoming election season, but if they do, then they are missing the point.”

ALEXEY SUROV, TRADER, BANK ZENIT

“Based on previous experience with the Russian market falling after terrorists attacks, I don’t think the market will stay down on the news for more than several days.

Aeroflot shares are down because investors are afraid the company’s revenue will go down, as strengthened security measures will lead to fewer flights and fewer people flying to and out of Moscow.”

JOHN WINSELL DAVIES, LEAD FUND PARTNER, WERMUTH ASSET

MANAGEMENT

“The Russian RTS (index) traded higher just five days after the Nord Ost hostage crisis. The RTS straight-line rallied 7.5 percent in the month of September following the Beslan school tragedy. Moscow does not believe in tears.”

ZSOLT PAPP, UBP ASSET MANAGEMENT, ZURICH

“If it was a terrorist attack then the timing was well chosen, but I don’t think any major investor will be deterred by a bomb attack from investing in any major Russian company. Russia is politically a stable country, remarkably stable, and other factors such as the oil price, play a much bigger role. For the kind of privatization that the government is lining up — medium to long-term players — I don’t think this will have an impact.”

YEVGENY GONTMAKHER, INSTITUTE OF MODERN DEVELOPMENT

“This tragic event will in no way influence Russia’s business climate, which is (already) unfavorable. The business climate is determined by more stable circumstances such as corruption and state interference with business, not by one-off events like this”

ALEXEI BACHYURIN, TRADER, RENAISSANCE CAPITAL

“It (the blast) is moving the market in the short term, but there is no fundamental reason for the market to fall. If you remember, the market didn’t react strongly to (previous blasts).

It is negative for airlines as it is clear that the rules will be tightened. The market went down as it was ready to go down — a lot of long positions were opened. All depends now on the United States. If they close up, we will open normally.”

FOREX TRADER AT MAJOR RUSSIAN BANK

“If it had been the Kremlin, it would have been a problem (for markets). But when it’s a social building like Domodedovo, it is perceived like a separatists’ act. It’s our reality. Our financial markets do not react to this.”

YAROSLAV LISSOVOLIK, CHIEF STRATEGIST, DEUTSCHE BANK

“I don’t think there will be a long term effect… We are already seeing some negative impact (on markets), but in the long run there will increased safety measures on flights and in airports. Gradually this negative impact will disappear, as we saw in past episodes of such events.”

VLADIMIR BRAGIN, ANALYST, ALFA BANK

“The blast, and the measures the government undertakes, will affect everything: first the transport industry, then infrastructure as a whole, which will in turn affect the oil sector. Additional security measures that may be introduced will probably scare some investors.”

ILYA MAKAROV, ANALYST, ATON

“The market reaction was negative. We had fallen by 1.3 percent (before the blast), and now by around 2.2 percent. The market was down because of Sberbank and Aeroflot, which are both state companies and always react first on such news. There are a lot of emotions.”

(Reporting by Moscow Newsroom)

NEW YORK (Reuters) – Stocks fell on Thursday as lackluster tech and materials earnings failed to live up to heightened expectations, threatening to short-circuit a seven-week run.

Declines were milder than on Wednesday, when a sharp drop pulled the market off two-year highs. Morgan Stanley posted stronger-than-expected revenue to help the banking (MS.N) sector rise modestly. Morgan Stanley rose 4.6 percent to $29.02.

But F5 Networks (FFIV.O) plunged 21.4 percent to $109.15 and pulled the Nasdaq lower after the leader in the network optimization market forecast weak second-quarter revenue.

“The tug of war continued during the course of the day with techs and financials — the two big behemoths in terms of bellwethers for the market — slugging it out all day,” said Joseph Benanti, managing director of Rosenblatt Securities in New York.

“We had a lot of movement on hot news that will subside. Cloud stocks are important, but they are not going to drive all technology. And the financials are a bigger sector to follow and are starting to hold their own.”

Google Inc (GOOG.O) rose 2.2 percent to $640.79 in extended trade after the company reported better-than-expected net revenue for its fourth quarter. The world’s No. 1 Internet search engine, whose stock is among the most closely watched, also said co-founder Larry Page will replace Eric Schmidt in April as chief executive.

Freeport-McMoRan Copper & Gold Inc (FCX.N) lost 3.7 percent to $110.90 after the copper producer trimmed its sales forecast and said costs would rise. Natural resources stocks also came under pressure after data showing high growth in China stoked fears the country may need to tighten credit in order to check inflation.

The Dow Jones industrial average (.DJI) dipped 2.49 points, or 0.02 percent, to 11,822.80. The Standard & Poor’s 500 Index (.SPX) fell 1.66 points, or 0.13 percent, to 1,280.26. The Nasdaq Composite Index (.IXIC) lost 21.07 points, or 0.77 percent, to 2,704.29.

BLOWING OFF POSITIVE DATA

Underscoring how overbought the market has become in recent weeks, stocks failed to react to positive jobs and housing market data that pointed to a strengthening recovery.

U.S. crude oil futures posted a third consecutive lower settlement. The expiring February crude contract settled at $88.86 per barrel, down 2.2 percent, which was the biggest percentage slide since prices fell 2.37 percent on January 4.

Alcoa Inc (AA.N), shed 0.5 percent to $15.98, while Exxon Mobil Corp (XOM.N) slipped 0.6 percent to $77.75.

In another example of how investors reacted to the market’s elevated earnings expectations, Parker Hannifin Corp (PH.N) shares fell 6.1 percent to $85.51. The company, which makes industrial control systems, beat earnings forecasts, but the stock slid as investors faulted the size of the beat.

The latest data indicated that two weak spots in the U.S. economy — housing and jobs — appear to be on the mend. U.S. existing home sales jumped more than expected in December despite bad weather as the housing sector struggled to recover from a severe slump, according to a report from the National Association of Realtors.

Earlier in the day, the Labor Department reported that U.S. initial jobless claims posted their biggest weekly decline in nearly a year.

Volume was above average with about 9.04 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, topping last year’s estimated daily average of 8.47 billion.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of 18 to 11, while on the Nasdaq, 19 stocks fell for every seven that rose.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

NEW YORK (Reuters) – U.S. stocks edged lower on Thursday as the recent rally and light volume left investors reluctant to take on much more risk before the new year.

After a 6.5 percent rally this month even a series of better-than-expected economic reports was not enough to spark buying activity on the penultimate trading day of the year.

Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois said investors will need to see signs of an sustained improvement in the economy to keep the rally alive next week.

“It will be interesting to see once we get past the holiday season if this holds up,” he said, referring to government data on Thursday that showed claims for jobless benefits fell to a two-year low. “We are stuck in that very narrow range until we start next year.”

Shares in Monster Worldwide Inc (MWW.N), an employment agency, rose 3.6 percent to $24.48 after the data. The Dow Jones U.S. business training and employment agencies index (.DJUSBE) rose 0.8 percent.

In a sign of investor anticipation of increased merger activity, Anadarko Petroleum Corp (APC.N) jumped 5.8 percent to $74.85 after the Daily Mail reported BHP Billiton Ltd (BHP.AX) (BHP.N) maybe lining up a $90 per share offer for the company.

The Dow Jones industrial average (.DJI) dropped 23.46 points, or 0.20 percent, to 11,561.92. The Standard & Poor’s 500 Index (.SPX) fell 2.34 points, or 0.19 percent, to 1,257.44. The Nasdaq Composite Index (.IXIC) lost 3.58 points, or 0.13 percent, to 2,663.35.

The S&P 500 is on course to close out its best December since 1991 when the index rose 11.2 percent.

Technical indicators such as the S&P 500′s relative strength index and elevated levels of bullishness are leading some investors to call for a pullback.

Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey said he expects equities to retreat in February, confounding widespread expectations of a January retreat.

“The common sense of the street is that we get pullback after this Santa Claus rally and a very strong run up in the S&P since August,” he said. “But I don’t think it will be in early January because everybody is expecting it.”

Analysts said investors were leery of taking large positions until next year, despite the positive data, as light holiday trading volume, coupled with the recent run-up, left the market more susceptible to volatile swings.

Data suggesting the economic recovery was gaining traction had little impact.

New U.S. claims for unemployment benefits dropped 34,000 to a seasonally adjusted 388,000, the Labor Department said, the lowest reading since early July 2008. That was well below economists’ expectations for 415,000.

A report from the Institute for Supply Management-Chicago showed activity in the U.S. Midwest jumped unexpectedly in December, with help from a gain in employment and new orders.

(Reporting by Edward Krudy; Editing by Chizu Nomiyama)