Germany's Chancellor Angela Merkel is welcomed by Greece's Prime Minister Antonis Samaras (R) upon arrival at Eleftherios Venizelos airport near Athens October 9, 2012.

ATHENS | Tue Oct 9, 2012 9:32am EDT

ATHENS (Reuters) - The tough path Greece is on will pay off, German Chancellor Angela Merkel said on Tuesday during a visit to Athens marred by clashes between police and protesters.

In her first visit to Greece since the debt crisis erupted here in 2009, Merkel commended Athens for what she described as important reform successes, but said more work was needed to reduce the country's debt mountain and restore competitiveness.

"A lot has been accomplished," Merkel said after talks with Greek Prime Minister Antonis Samaras.

Samaras said Greeks were "bleeding" but would stick to their reform pledges and were determined to stay in the euro.

(Writing by Matt Robinson)

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Visitors talk near the welcome desk of the EADS booth at the ILA Berlin Air Show in Selchow near Schoenefeld south of Berlin on September 13, 2012.

PARIS/BRUSSELS | Tue Oct 9, 2012 8:04am EDT

PARIS/BRUSSELS (Reuters) - The boards of EADS and BAE Systems prepared to weigh the results of weeks of tough political negotiations over a $45 billion merger on Tuesday with momentum building for an extension to a Wednesday deadline for the deal.

Several sources briefed on the negotiations said France and Britain had narrowed differences over the wording of key guarantees on state shareholdings, raising the prospect that the companies will buy more time to complete the complex deal.

"There has been some progress," a source close to the talks said, asking not to be identified.

But a French government source said the country had not changed its official opposition to a 10 percent cap on its future shareholding in the group, which would be the world's largest aerospace and arms conglomerate with 220,000 employees.

Differences between Britain, France and Germany over state control, jobs and investment have threatened to derail the talks, which have also drawn criticism from a number of investors.

The companies say they cannot spell out the full benefits of the merger before completing negotiations over the shape of the company's capital and possible guarantees on investment.

EADS Chief Executive Tom Enders and BAE Systems Chief Executive Ian King were due to review the talks with their boards and make a decision on the merger, on which the two managers have staked their careers and industrial ambitions.

"Ian King and Tom Enders will discuss the situation later today and then decide, jointly with the respective company Boards, the way forward," EADS said in an emailed statement.

The companies have insisted they will only request an extension to the October 10 deadline set by UK regulators if there is meaningful progress at government level.

Britain and France have the power to veto the deal, which must also be approved by the United States and overcome political objections in Germany.

UNIONS ON STAND-BY

Core EADS shareholders Lagardere, the French media firm, and German car firm Daimler also have the right to veto a deal. Both have expressed unease about the terms but are not participating in board discussions to prevent a conflict of interest, according to a person familiar with the talks.

EADS has put its unions on stand-by for briefings on a possible deal in either one week or two weeks, union officials said, suggesting the companies would seek a far shorter extension that the maximum allowed 28 days. A scheduled European works council went ahead on Tuesday with no managers present.

British Defense Secretary Philip Hammond said he hoped to meet his French, German and U.S. counterparts to discuss the proposed merger on the sidelines of a NATO meeting.

"We always knew that there was a crunch point this Wednesday and the company has to decide today whether it's going to ask the stock exchange for an extension of time or not," Hammond told reporters in Brussels.

(Additional reporting by Gernot Heller, Mathias Blamont, Sophie Sassard, Paul Sandle, Chris Vellacott, Arno Schuetze, Elizabeth Pineau, editing by Peter Millership)

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John Magaro as Douglas (L), Brahm Vaccarella as Joe Patuto (2ndL), Jack Huston as Eugene and Will Brill as Wells (R) are pictured from a scene in the film ''Not Fade Away'', from Paramount Vantage and Indian Paintbrush in Association with The Weinstein Company, in this handout promotional photo. The creator of the popular ''Sopranos'' is back, this time on the big screen with a new saga set in the New Jersey suburbs filled with teenagers and rock 'n' roll instead of mobsters and violence.

NEW YORK | Mon Oct 8, 2012 6:51pm EDT

NEW YORK (Reuters) - The creator of the popular "Sopranos" is back, this time on the big screen with a new saga set in the New Jersey suburbs filled with teenagers and rock 'n' roll instead of mobsters and violence.

David Chase's cinema debut, "Not Fade Away", which premiered at the New York Film Festival, is a coming-of-age story set in the early 1960s, centered around a group of teens who form a band and taste the entwined allures of rock music and rebellion.

At the core of the story is Douglas, played by John Magaro with the sleepy eyes and curly mop of a young Bob Dylan, who aspires to become a singer and songwriter.

Along the way come friendships and conflicts among the band members and growing tension with Douglas' traditionally minded family, particularly his father, played by James Gandolfini.

Joining Gandolfini, best known as mobster Tony Soprano, in the making of "Not Fade Away" is another "Sopranos" alumnus, Steve Van Zandt. Van Zandt played mobster Silvio Dante on the hit HBO television series, produced and written by Chase, which ended five years ago.

A guitarist in Bruce Springsteen's E Street Band, Van Zandt served as music supervisor for "Not Fade Away" and taught the actors to play hits by Buddy Holly, the Beatles, the Rolling Stones and the Kinks in a 3-month musical studio "boot camp," he said at a press briefing in New York.

"They're a band now. They could perform at a party tonight," Van Zandt said. "It took me, like, 10 years to learn what they learned in three months."

Chase, 67, said the movie is immensely personal, but he stopped short of calling it autobiographical, despite his stint playing drums in a band as a teenager.

"We never got out of the basement," he said. "No one ever saw us."

"Not Fade Away" is infused with music, from the songs the band members learn to play to the ones they dream of playing, the ones they listen to and the music in other scenes viewers get to hear.

And the music illustrates freedom, as promised by rock 'n' roll as Douglas tries to follow his dream, and the safer choices made by the older generation, poignantly depicted by Gandolfini as he listens to "South Pacific" show tune "Bali Ha'i" in his tiny New Jersey home.

The movie grows out of the conflict between security and freedom, Chase said.

"Human beings are always in that conflict about 'I want to be part of something, I want to be babied, I want to be taken care of' and ... 'I'm free and I can do what I want and I'm my own person,'" he said.

Early reviews have ranged from very good to fair. Some critics praised Chase's sharp dialogue and his ability to capture the era's social and political changes, and one described Gandolfini's performance as Oscar-worthy.

But other critics said Chase failed to develop his characters well and called his plot and story-telling formulaic, bringing no fresh insight to its look at an endlessly scrutinized era in U.S. history.

"Not Fade Away" is slated for release in December by Paramount Pictures.

(Editing by Christine Kearney; Editing by Richard Chang)

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LONDON | Tue Oct 9, 2012 8:23am EDT

LONDON (Reuters) - A global supervisory body for securities has published its final recommendations for new rules for the $4.7 trillion money market fund sector despite opposition from its U.S. member.

The recommendations were called for by leaders of the world's top economies (G20) a year ago as part of efforts to crack down on "shadow banks" that also include hedge funds, special investment vehicles and repurchase agreements.

The International Organization of Securities Commissions (IOSCO) said the recommendations - which the body's regulatory members such as Britain's Financial Services Authority will apply locally - cover valuations, liquidity management, use of ratings and disclosures to investors.

"Although money market funds, which provide a significant source of credit and liquidity, did not cause the crisis, their performance during the 2007/08 financial turmoil highlighted their potential to spread or even amplify a crisis," IOSCO said in a statement.

Some regulators worry that as traditional banks become more heavily regulated, risky credit activities will shift to shadow banks which are currently less regulated.

IOSCO's 15 recommendations supplement reforms already introduced in the United States and Europe in 2010. It will review within two years how they are being applied.

The industry says money market funds are safe and don't need more rules.

Most of the commissioners from the U.S. Securities and Exchange Commission (SEC), an IOSCO member, opposed the publication of the global watchdog's recommendations.

In August, the SEC commissioners blocked U.S. proposals to introduce more rules for the money market funds sector on top of those already implemented in the United States in 2010.

IOSCO said that apart from U.S. opposition, there were no other objections to it publishing the recommendations on Tuesday.

The watchdog's members, who also include Bafin of Germany and Japan's Financial Services Agency, regulate more than 95 percent of the world's securities markets and are required to implement agreed rules.

(Reporting by Huw Jones; Editing by Laurence Fletcher and David Holmes)

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MEXICO CITY | Tue Oct 9, 2012 9:23am EDT

MEXICO CITY (Reuters) - Mexican inflation accelerated to a new 2-1/2-year high in September as prices of fresh food continued to rise although analysts expect no immediate reaction from the central bank.

Annual inflation rose to 4.77 percent last month, up from 4.57 percent in August but just below the 4.78 percent expected in a Reuters poll, the national statistics agency said on Tuesday.

It was the highest rate since March 2010 and puts inflation even further above the central bank's 4 percent tolerance limit, which it has now overshot for four months in a row.

Still, Banco de Mexico Governor Agustin Carstens has said it is important not to move interest rates from their current 4.5 percent level prematurely, as the central bank is watching for signs that price pressures are spreading through the economy.

The latest increase in consumer prices was driven by a 14 percent annual rise in egg prices, following an avian flu outbreak this year in western Mexico, with overall agricultural prices up 16 percent, the statistics agency said.

Consumer prices rose 0.44 percent in September from August compared to an expected 0.45 percent rate and a 0.30 percent rise in August.

But the rate of increase in core prices eased. The core price index, which strips out some volatile food and energy prices, rose 0.18 percent compared to an expected 0.20 percent increase and a 0.22 percent rise in August.

Policymakers have said they expect the jump in prices to be transitory and the market is betting on stable interest rates through next year.

Still, analysts recently raised their forecasts for inflation this year to 4.15 percent, increasing their estimates in a central bank poll issued last week for the fourth month in a row.

(Reporting by Krista Hughes; Editing by James Dalgleish)

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1 of 10. International Monetary Fund's Economic Counsellor and Director of Research Department Olivier Blanchard (2nd R), Deputy Director Jorg Decressin (2nd L), Division Chief Thomas Heibling (R) and Senior Press Officer Gita Bhatt hold a news briefing on the World Economic Outlook (WEO), at the Tokyo International Forum in Tokyo October 9, 2012. The IMF said the global economic slowdown is worsening as it cut its growth forecasts for the second time since April and warned U.S. and European policymakers that failure to fix their economic ills would prolong the slump.

TOKYO | Tue Oct 9, 2012 9:02am EDT

TOKYO (Reuters) - The IMF said the global economic slowdown is worsening as it cut its growth forecasts for the second time since April and warned U.S. and European policymakers that failure to fix their economic ills would prolong the slump.

Global growth in advanced economies is too weak to bring down unemployment and what little momentum exists is coming primarily from central banks, the International Monetary Fund said in its World Economic Outlook, released ahead of its twice-yearly meeting, which will be held in Tokyo later this week.

"A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component," it said.

"The answer depends on whether European and U.S. policymakers deal proactively with their major short-term economic challenges."

Ahead of the Tokyo meeting, policymakers have flagged the U.S. "fiscal cliff" -- government spending cuts and tax raises due to take affect early in 2013 -- and resolving the euro area's debt crisis as the top issues facing the global economy.

U.S. Treasury Secretary Timothy Geithner said on Tuesday that reforms in Europe "could take years to bear fruit".

"In these periods of time, where people were very worried about the risk of collapse in Europe, you saw an impact on financial markets and confidence that was very, very substantial," he told a meeting of Indian and U.S. business leaders in New Delhi. "Europe still has a very hard road ahead of them."

His comments echoed those of Canadian Finance Minister Jim Flaherty, who last week said Europe's debt crisis was "a clear and present danger".

The IMF forecast in its latest health check on the world economy that global output in 2012 would grow just 3.3 percent, down from a July estimate of 3.5 percent.

That would make this the slowest year of growth since 2009 when the world was struggling to pull out of the global financial crisis. It predicted only a modest pickup next year to 3.6 percent, below its July estimate of 3.9 percent.

It projected U.S. growth would be a little more than 2 percent this year and next, but forecast a contraction in the euro area this year by 0.4 percent and modest growth in 2013 of 0.2 percent.

Emerging markets are still expected to grow four times as fast as advanced economies, but the IMF took a sharp knife to its estimates for India and Brazil, with the latter now seen growing slower than the United States this year.

It also cut its expectations for China in 2012 and 2013 but warned against being overly pessimistic about the prospects of these economies, which were major engines of growth in the global financial crisis.

"Let me be clear. We do not see these developments as signs of a hard landing in any of these countries," IMF Chief Economist Olivier Blanchard said at a briefing, referring to China, India and Brazil.

MORE AT WORK

The IMF said "familiar" forces were dragging down advanced economy growth: fiscal consolidation and a still-weak financial system, the same problems that have plagued the world since the global financial crisis exploded in 2008.

"More seems to be at work, however, than these mechanical forces - namely, a general feeling of uncertainty," Blanchard said in a commentary on the forecasts.

Measures of risk and uncertainty, such as the VIX volatility gauge in the United States, remain at low levels, Blanchard pointed out, which makes it difficult to assess the nature of the uncertainty.

"Worries about the ability of European policymakers to control the euro crisis and worries about the failure to date of U.S. policymakers to agree on a fiscal plan surely play an important role, but one that is hard to nail down," Blanchard said.

Geithner, who was speaking at an India-U.S. business forum in New Delhi, said he was "relatively confident" that Washington can manage its fiscal challenges.

"Now we're growing close to potential but if you look through those factors, it's a little more encouraging than you might think," he said. "We are now in a much stronger position than what is true for any other major developed economy."

Concerns about the health of the global economy and corporate earnings prospects have weighed on financial markets. World shares as measured by the MSCI world equity index .MIWD00000PUS fell 0.7 percent on Monday. The index was flat in Asia on Tuesday.

S&P 500 earnings for the third quarter are forecast to have fallen more than 2 percent from the year-earlier period, which would be the first decline in three years, Thomson Reuters data shows.

The IMF said financial conditions are likely to remain "very fragile" over the near term because repairing euro zone problems will take time and there are concerns about how the U.S. economy will cope with the expected spending cuts and tax increases.

The "urgent policy priorities" for the United States should include avoiding the fiscal cliff, which the IMF said at the extreme would amount to a fiscal withdrawal of more than 4 percent of GDP in 2013, and economic growth would stall.

"Both sides of the political isle (should) signal that they are willing to compromise and that they're willing to get this done ... that could help lower the level of uncertainty that is affecting U.S. investors and consumers," IMF First Deputy Managing Director David Lipton told Reuters in an interview on Monday.

Resolving the euro area crisis would require progress in adopting and implementing the various measures discussed, including banking and fiscal union, the IMF report said.

"If the complex puzzle can be rapidly completed, one can reasonably hope that the worst might be behind us," Blanchard said.

Euro zone finance ministers on Monday unveiled the European Stability Mechanism (ESM), a 500 billion euro rescue mechanism for lending to distressed economies in the 17-country bloc.

But perhaps the biggest contagion risk for the region is Spain, which a British finance ministry source suggested will be the top issue for finance ministers in Tokyo.

"We have always been very clear that the euro zone needs to take significant action," the source said.

The euro zone has already set aside 100 billion euros for Spain to recapitalize its banks but financial markets believe a government bailout will follow in coming weeks or months.

(Additional reporting by Anna Yukhananov in TOKYO, David Milliken in LONDON and Manoj Kumar and Rajesh Kumar Singh in NEW DELHI; Editing by Neil Fullick, Alex Richardson and Ron Popeski)

(This story corrects quote by Geithner in 7th paragraph)

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