By Amena Bakr

  DUBAI (Reuters) - Thaksin Shinawatra, the ousted former prime minister backing his sister's bid to unseat the ruling party in Thailand's upcoming general election, is optimistic about the outcome -- and a possible homecoming.

  The billionaire former telecommunications tycoon, who lives in exile to avoid a prison sentence for graft, said he hoped to return to Thailand by December, but acknowledged in an interview with Reuters that he would have to negotiate with his powerful enemies first.

  Living in Dubai since fleeing Thailand ahead of a 2008 court verdict, the twice-elected Thaksin said he was in regular contact with his youngest sister, Yingluck Shinawatra, while managing what remains of his wealth from a villa in the cosmopolitan desert city.

  The 61-year-old, self-styled " CEO Premier" who was accused of authoritarianism during his five years in office, appeared to be more conciliatory now, urging dialogue with the Thai establishment and the generals who overthrew him in a 2006 coup.

  " In politics we have to use the iron fist and the velvet glove," said Thaksin, who has made his home in a region that has seen unprecedented upheaval since early 2011 with people in Tunisia, Libya, Egypt, Bahrain, Yemen and Syria taking to the streets against their governments.

  " Nowadays you have to use more of the velvet glove than iron fist. During time of conflict you need to have more dialogue instead of just trying to use law to suppress the other side," he said, referring to Thailand long-running political crisis.

  Thaksin's Puea Thai Party is challenging Prime Minister Abhisit Vejjajiva's ruling Democrats in a July 3 election and Yingluck's entry into the race as prime minister candidate has energised Thaksin's urban and rural working class supporters, who see him as a mould-breaking populist hero.

  Thaksin urged his rivals not to interfere in the election or try to influence the formation of the next government.

  " They have to respect the decision of the people, otherwise there is no use to arrange an election," he said.

  The former policeman and Premier League soccer club owner is betting that victory will pave the way for a general amnesty that might allow him to return without going to prison.

  YEARNING FOR HOME

  Thaksin's yearning for his homeland is clear at his resplendent white mansion in the upscale Emirates Hills area of Dubai, where he surrounds himself with Thai orchids and at least half a dozen Thai staff.

  Magazines from home are stacked up on a coffee table next to a bowl of Thai candy and the smell of Thai food wafts through the room.

  Messengers travel back and forth between his home and Bangkok, relaying information to his allies. Abhisit suspects Thaksin of funding Puea Thai and running the opposition through his Yingluck, a 43-year-old businesswoman.

  Asked what he meant by once calling Yingluck his " clone" Thaksin said he had played a big role in her upbringing.

  " That means that her attitude, her thinking and culture are very similar to me," he said.

  He took pains to pledge his loyalty to Thailand's King Bhumibol Adulyadej, who although in hospital for nearly two years, still wields much influence. Thaksin has been accused of republicanism, which he vehemently rejects.

  " We want to have everybody to be comfortable with us, that our party is very loyal with the monarchy," Thaksin said. " There is no question about the loyalty with the monarchy that is one message that we keep sending."

  He hoped to return to Thailand in December for the wedding of one of his daughters. However, he accepted that could only happen following negotiations with his opponents, in particular, Thailand's politicised army.

  Thaksin, who has had his Thai citizenship revoked, uses Dubai as a base and travels on Montenegrin and Nicaraguan passports. He said he was scouting investments in Africa, playing golf and he likes to stroll in Dubai's air-conditioned malls, where he is often recognised and asked to pose for photographs.

  " I'm a mascot in Dubai Mall, when I meet some Asian people, like Singaporean, Chinese and Malaysian, they recognise me and they ask to take pictures with me," he said. " I'm the man of the people, so I'm OK, I don't mind."

  Thaksin is also friends with Pakistan's exiled former president Pervez Musharraf, who has also taken up residency in Dubai and was at Thaksin's mansion this week for a meal.

  Thaksin said he has $1 billion (619 million pounds) of his wealth remaining, having had $1.4 billion confiscated last year by a Thai court, which ruled it had been amassed illegally while in office.

  " I don't have much money left," he said.

  " The government stole my money. (Now) I invest in mining, gold, platinum and coal. I think the price of gold will be increasing and by this year will probably go to $1,600 (per ounce)."

  Although Abhisit has been credited with steering Thailand through the 2008 global financial crisis, Thaksin, whose Puea Thai Party is promising wage increases and cheap credit for the poor, said more work was needed to raise rural incomes and boost domestic consumption.

  " We have to spur the domestic economy, that is the top priority, from the grassroots level. And I believe we cannot move the pyramid from the top, we have to move from the bottom."

  Thaksin said the party was also targeting infrastructure development, such as reclaiming land and expanding rail networks to relieve urban congestion in Bangkok.

  Foreign partners for such projects could be paid in barter deals, he said: " Instead of paying in U.S. dollars, we can pay in agricultural currency like rubber, rice and chicken."

SEOUL, June 17 (Reuters) - U.S. crude futures remained unchanged in early Asian trade on Friday after rebounding on a forecast of higher demand from the International Energy Agency (IEA).

 

  FUNDAMENTALS

  * On the New York Mercantile Exchange, July crude < CLc1> was up 7 cents to $95.02 a barrel as of 0038 GMT.

  * Front-month ICE Brent August crude < LCOc1> rose 14 cents to $114.16 a barrel.

  * The West's energy watchdog EIA said higher demand and reduced spare OPEC capacity will leave oil markets under greater strain between now and 2012 than previously thought, the International Energy Agency said. Also the IEA said OPEC should steeply raise output as seasonal demand from refiners was set to soar in the third quarter.

  * U.S. Mid-Atlantic factory activity contracted in June to a near two-year low, overshadowing better than expected readings on the nation's labor and housing markets. While the mixed reports on Thursday were the latest confirmation the economy continued to sputter in the second quarter, they also offered evidence that the recovery was on course to regain momentum as the year progresses.

  * In Europe, Greek Prime Minister George Papandreou, assailed by violent demonstrations and political defections, fought on Thursday to form a cabinet that would back painful measures to avoid defaulting on the national debt.

 

  * NATO planes resumed bombardments of Tripoli after Muammar Gaddafi's son said the Libyan leader was willing to hold elections and step aside if he lost, an offer rejected by rebels and the United States.

 

  MARKETS NEWS

  * The euro was steadier in Asia on Friday after it slumped to a record low on the Swiss franc, before staging a rebound as the market reacted to headlines about Greece's debt crisis. The euro/dollar was quoted at $1.4192/94. The dollar index against a basket of major currencies lost 0.37 percent to 75.474.

  * The Nikkei average edged higher on Friday, recouping some of the losses posted the previous day as a rebound in U.S. stocks reassured the market. The Nikkei added 0.3 percent to 9,435.88, while the broader Topix index gained 0.2 percent to 813.71.

  * U.S. stocks rose in volatile trading on Thursday, thanks only to technical factors and options expirations. But raging uncertainty about Greece prevented investors from committing money to the market. The Dow Jones industrial average gained 0.54 percent to 11,961.52. The Standard & Poor's 500 Index added 0.18 percent to 1,267.64. But the Nasdaq Composite Index dropped 0.29 percent to 2,623.70.

* Nikkei dips below 9,400 support level

  * But sharp losses unlikely -analyst

  * Tax hike report sours sentiment -analyst

  By Ayai Tomisawa

  TOKYO, June 17 (Reuters) - The Nikkei average was flat on Friday after dipping below a support line at 9,400 as investors stayed cautious about developments in Greece's debt problems, offsetting the effect of a rebound in U.S. stocks.

  Analysts said the Nikkei may trade near at 9,400 as bargain-hunting opportunities are also expected due to low valuations of Tokyo stocks.

  The Nikkei has traded mainly between 9,400 and 9,800 since April and analysts expect this range to hold for the next few weeks, saying Tokyo shares are trading roughly at book value compared with around 2.1 times book value for the S& P 500 .

  " Bargain hunting may support the market to some extent, but volume may be low before the weekend," said Hiroichi Nishi, general manager at SMBC Nikko Securities.

  He also said the Nikkei may stay above 9,400 in the next few days as there are expectations for buying of exchange-traded funds by the Bank of Japan if it stays below that level for long.

  The Nikkei was flat at 9,410.68 at the midday break, while the broader Topix index fell 0.4 percent to 809.00.

  Volume was low, with only 796 million shares changing hands on the Tokyo stock exchange's main board, and is set to end lower than Thursday's 1.79 billion shares and the average for the past six sessions.

  Analysts said concern about tax hikes is adding to the market's sluggishness, while a newspaper reported that Japan's ruling party aims to raise corporate and income taxes to repay new government bonds for funding massive reconstruction needed after the March 11 earthquake.

  The ruling Democratic Party (DPJ) is considering raising both taxes by around 10 percent, generating 1-2 trillion yen ($12.4 billion-$24.8 billion) in annual revenue to pay back borrowing for reconstruction over a decade, the Mainichi newspaper reported this week.

  " It looks like tax hike debates are on the table, and this is not good for either foreign investor sentiment or consumer sentiment," said Hideyuki Okoshi, general manager at Chibagin Securities.

  DeNA , a mobile phone gaming site operator, rose 4.8 percent to 3,280 yen after it raised its quarterly earnings outlook on Thursday.

  It now expects to post a net profit of 9.2 billion yen for the April-June quarter, compared with previously forecast 7.6 billion yen.

  Shares of Sekisui House , Japan's largest homebuilder, fell 5.7 percent to 717 yen after it said on Thursday it would issue a 50 billion yen bond to help fund expansion in China and repay debt.

  Facing a stagnant home market, Sekisui House needs to fund growth overseas to keep profits rising. ($1 = 80.615 Japanese Yen) (Editing by Michael Watson)

HONG KONG, June 16 (Reuters) - Hong Kong shares slumped to their lowest levels this year to date on Thursday, breaking past key supports of the past few sessions, suggesting more losses can be expected ahead.

  The benchmark Hang Seng Index closed down 1.75 percent to 21,953.11, breaking below 22,123, the previous 2011 low recorded in mid-March that served as support for the past five sessions. The China Enterprise Index traded down 1.91 percent to 12,161.42.

  Shares on the mainland also hit the lowest levels this year to date, with the Shanghai Composite Index closing down 1.5 percent to 2,664.3 points, an 8-1/2 month low.

 

  HIGHLIGHTS

  * HSBC Holdings , Europe's biggest bank, is delighting short sellers. The stock declined 1.54 percent to lead the Hang Seng Index lower after falling below HKD$77.73 a share, the 61.8 pct retrace of the May 2010 to Feb 2011 rise that has served as solid support all year, to HKD$77.05.

  * After four tries, the stock dropped below the retracement, and the next supports may be the August 2010 low at HKD$75.15 and the 76.4 pct retrace at HKD$74.33. Short selling activity picked up on Wednesday to 43 pct of turnover in the stock, nearly three times the 90-day average short-selling activity.

  * At a time when global macro fears are rising, Chinese shipping stocks are vulnerable to being capsized. China Cosco dropped to a two-year low and China Shipping Container Lines to a one-year low.

  * Analysts have been busy trying to get ahead of the increasingly gloomy forecasts for Western demand by cutting estimates. In the past week, 4 of the 19 analysts covering China Cosco have trimmed their 2011 revenue estimates by an average 2.5 pct, and five have slashed their 2012 EPS views by an average 73.5 pct, Thomson Reuters StarMine showed. Analysts have dropped their 2012 EPS forecasts for China Shipping by an average 57 pct. (Reporting by Clement Tan and Kevin Plumberg Editing by Jonathan Hopfner)

* Seven-day repo rate jumps 206 bps to 6.2338 pct

  * Could rise above 7 pct this week on RRR hike payment

  * IRS up as interest rate hike jitters linger

  * RRR hike to drain 380 billion yuan by next Monday

  By Lu Jianxin and Jacqueline Wong

  SHANGHAI, June 15 (Reuters) - China money market rates spiked on Wednesday, with the key seven-day repo rate jumping 206 basis points to its highest level since late February, after the central bank surprised the market with a rise in banks' reserve requirement ratios (RRR).

  The benchmark weighted average seven-day government bond repurchase rate , which ended up at 6.2338 percent from 4.1757 percent at Tuesday's close, has the potential to rise further to surpass 7 percent later this week as payment draws near for the latest RRR hike, which is set to freeze 380 billion yuan ($59 billion), traders said.

  " Even if we have cash on hand, we need to prepare for rainy days when a liquidity squeeze is likely to become more severe along with the approach of the RRR hike payment," said a trader at a Chinese commercial bank in Shanghai.

  China's interest rate swaps rose moderately as investors expect the People's Bank of China would still raise interest rates later, although they believe the RRR hike would delay the official rate increase for a while.

  The benchmark five-year IRS rose 9 basis points to 3.94 percent in late trade, the 10-year < IRS CNYQB7R10Y=> also gained 9 bps to 4.16 percent while the one-year IRS was up 13 bps at 3.74 percent.

 

  WHY RRR RISE FIRST?

  Before the RRR hike, the seven-day repo rate, the main barometer of short-term liquidity supply, had already stood mostly above 4 percent over the past month in a clear sign that the market lacks cash flow.

  After data on Tuesday showing annual inflation at a 30-month high of 5.4 percent in May, the market had widely expected the central bank to raise official interest rates, not RRR.

  But the PBOC announced after the market close on Tuesday a 50 basis-point RRR increase taking effect next Monday, forcing big banks to put aside a record high 21.5 percent of their deposits as required reserves.

  " It appears to be a choice of the less harmful between two moves that both have a negative impact on the economy," said a dealer at an Asian bank in Shanghai.

  " While an RRR hike will only hit corporate short-term cash flow, an interest rate increase would affect all fundraising activities and thus do more harm."

  The central bank kicked off a new monetary tightening cycle last October and has since raised official rates four times and bank reserve ratios nine times in an effort to fight inflation.

* Euro falls on debt concerns last week's low in sight

  * Moody's places French bank ratings under review

  * EUR/USD risk reversals show bets against EUR at 6-mth high

  By Jessica Mortimer

  LONDON, June 15 (Reuters) - The euro weakened on Wednesday, as euro zone ministers failed to reach agreement on how to tackle the Greek debt crisis and Moody's threatened large French banks with possible downgrades.

  The euro looked poised to test last week's low against the dollar around $1.4320, with traders citing sovereign and macro fund selling above $1.4400.

  The euro was down 0.4 percent at $1.4364, hovering just above its 21-day moving average at $1.4353, with bids cited around $1.4340-50 and more at $1.4320-25 seen capping losses in the short term. Stop loss orders were reported at $1.4350.

  " I wouldn't expect the euro to fall very sharply. Positioning is a bit long euro/dollar but not extreme and we're unlikely to see a squeeze moving it rapidly lower," said Niels Christensen, currency strategist at Nordea in Copenhagen.

  Euro zone finance ministers failed on Tuesday to reach agreement on how private holders of Greek debt should share the costs of a new bailout.

  Investor concerns were exacerbated as Moody's rating agency said it was reviewing the ratings of BNP Paribas SA, France's biggest bank, Societe Generale SA and Credit Agricole SA due to their exposure to Greek debt..

  The single currency was also hurt by a Financial Times report that the German-inspired Greek debt rescheduling plan could force euro zone governments to provide up to an extra 20 billion euros for the financial sector.

  " The problem is not the fact that Greece is likely to face some form of a default. The problem is that the debate over the involvement of private investors in the rescue scheme drags on, making market participants jittery," said Teppei Ino, a currency analyst at Bank of Tokyo-Mitsubishi UFJ.

  The euro came off a high hit in Asian trade of $1.4451 on EBS trading platform after Tuesday's better-than-expected U.S. retail sales and Chinese inflation data boosted risk appetite.

  The single currency was steady against the safe-haven Swiss franc at 1.2204 francs, holding after failing to break below hefty options barriers at $1.2000 earlier in the week. Investors were wary ahead of a Swiss National Bank policy meeting on Thursday.

 

  BOLSTERING BEARISH BETS

  The debate over Greece's rescue prompted hedge funds to bolster bearish bets on the single currency via put options as they expected more negative headlines in coming days.

  Risk reversals show increasing demand for bets on a lower euro against the dollar. The 25 delta one-month euro/dollar risk reversal hit levels not seen since December, trading at around 2.1 in favour of euro puts.

  " They have been buying substantial amounts of long-term euro put options," a trader at a Japanese bank in Tokyo said, adding strikes were at around $1.40 with tenors of one to two months.

  " Funds seem to be positioning to buy back the greenback."

  The dollar index, which tracks its performance against a basket of currencies, was up 0.5 percent at 74.701.

  But dollar gains were limited by concerns over lawmakers and officials failure to lift the U.S. debt ceiling.

  U.S. Federal Reserve chairman Ben Bernanke warned the United States could lose its AAA credit rating while the dollar's status as a reserve currency could be damaged if there was no quick resolution on raising the debt limit.

  The dollar was up 0.2 percent at 80.60 yen, well within the prevailing 79.50-81.00 yen range.

  The Australian dollar was up 0.1 percent at $1.0693, after rising above $1.0700 as the Reserve Bank of Australia governor said an increase in interest rates is still likely to be needed to restrain inflation.

  (Additional reporting by Antoni Slodkowski in Tokyo)

By Nick Carey and Youssef Boudlal

  TRIPOLI/KIKLA, Libya (Reuters) - NATO warplanes attacked Tripoli on Tuesday night after Libyan rebels pushed back forces loyal to leader Muammar Gaddafi on three fronts, bringing them closer to the capital.

  The strikes followed a lull in NATO bombing of Tripoli on Tuesday, but in the evening loud blasts rocked the city with plumes of smoke filling the sky to the east and aircraft flying overhead.

  Libyan state TV said the bombs had struck military and civilian targets in Firnag, one of the most populated areas in the capital, and Ain Zara. It said there were casualties.

  Earlier in the day rebels tried to advance in the east, setting their sights on the oil town of Brega to extend their control over the region, epicentre of the four-month rebellion against Gaddafi's four-decade rule.

  NATO defence chiefs met in Belgrade to discuss the mission, after U.S. Defence Secretary Robert Gates accused some European allies of failing to pull their weight.

  A senior NATO commander appeared to raise questions about the alliance's ability to handle a long-term intervention in Libya.

  " We are conducting this operation with all the means we have, and the best we can. If the operation were to last long, of course, the resource issue will become critical," General Stephane Abrial said.

  In a sign that Gaddafi forces may be getting stretched, the rebels seized the town of Kikla, 150 km (90 miles) southwest of Tripoli. They also pushed several kilometres west of their Misrata stronghold to the outskirts of government-held Zlitan.

  NATO LEAFLET WARNING

  The push to Kikla followed weeks of deadlock between the rag-tag rebel army and government forces, though air strikes by NATO have taken their toll on Gaddafi's better-equipped troops.

  A NATO leaflet drop warning of helicopter strikes prompted some rebels to retreat from their newly captured positions outside Zlitan.

  " We came back because of the leaflets from NATO. I hope there is some coordination between the fighters and NATO ... Is it logical that NATO has no idea we took those positions?" said local commander Mohammed Genei.

  A NATO official said the alliance did drop leaflets warning of the possibility of attack by helicopters, but said this was west of Misrata, and closer to Zlitan.

  Even without the threat of NATO attack, the rebels said they would not attack Zlitan, citing tribal sensitivities. Instead they would wait for the local inhabitants to rise up.

  A NATO official said warplanes had hit an ammunition store at Waddan, not far from Al Jufrah, after Libyan television said Al Jufrah, in central Libya, had been bombed for a second day.

  Tunisia flew an F-5 warplane and a helicopter along its border with Libya after Libyan troops fired several rockets into Tunisia.

  The explosions, close to rebel territory in Libya's Western Mountains southwest of Tripoli, caused no damage or injuries.

  A Reuters journalist in Ryayna, 15 km east of Zintan in the Western Mountains, said rebels had taken the village and pushed back Gaddafi's forces.

  The rebels, who had been trying to seize Ryayna for several weeks, said two of their fighters had been killed, but they had taken prisoners, including foreign fighters.

  " We have captured 15 pro-Gaddafi soldiers, three of them were Libyans and the remaining 12 were either Chadians or Touaregs," rebel spokesman Abdulrahman said from Zintan.

  (Additional reporting by Sami Aboudi in Cairo and Souhail Karam in Rabat Writing by John Irish editing by Tim Pearce)

(Updates)

  * Worry over euro zone debt intensifies

  * Oil falls and gold gains

  * Nikkei up 0.3 pct, Hang Seng down 0.3 pct

  By Robert Birsel

  SINGAPORE, June 15 (Reuters) - The euro came under fresh pressure in Asia on Wednesday as worry about euro zone debt intensified, prompting a move away from riskier assets which helped gold extend gains.

  Asian stocks outside Japan were largely flat. Markets generally opened higher as positive data from the world's two largest economies encouraged investors to buy into growth-sensitive assets.

  But later, concern about the global outlook and the Greek debt crisis made indexes slip. Shares in Japan and Korea rose.

  European stocks were expected to inch lower early on Wednesday as investors' appetite for riskier assets was seen falling after the euro zone ministers failed to finalise the Greek deal.

  The ministers were unable to agree on how private holders of Greek debt should share the costs of a new bailout, putting the onus on the leaders of Germany and France to forge a deal later this week.

  Selling pressure also increased as Moody's placed Credit Agricole, BNP Paribas and Societe Generale on review for a possible downgrade, focusing on their holdings of Greek public and private debt.

  Oil fell on Wednesday as the dollar strengthened after the failure to strike a Greek agreement, while rising gasoline stockpiles in the United States signalled fuel demand is stalling.

  The euro was also hurt by a report in the Financial Times saying the German-inspired Greek debt rescheduling plan could force euro zone governments to provide up to an extra 20 billion euro. The currency earlier came under pressure having failed to break through $1.4500 .

  European Central Bank Executive Board member Juergen Stark said on Wednesday that debt relief from private banks to Greece must be on a voluntary basis, otherwise a contagion could break out on financial markets.

  " The problem is not the fact that Greece is likely to face some form of a default. The problem is that the debate over the involvement of private investors in the rescue scheme drags on, making market participants jittery," said Teppei Ino, a currency analyst at Bank of Tokyo-Mitsubishi UFJ.

 

 

  The euro was down 0.2 percent at $1.4414 after reaching an Asian session high of $1.4451 early on Wednesday after better-than-expected U.S. retail sales and Chinese inflation data boosted risk appetite the day before.

  The euro briefly dipped below support at $1.4410 and decent support was seen at $1.4375, with traders talking about good size stops at $1.4350. It also inched back towards a record low against the Swiss franc hit on Friday below 1.2 euro.

  The dollar bought 80.50 yen , still well within the prevailing 79.50-81.00 yen range, where the pair seems to have stabilised after falling from an April peak around 85.50.

  The Australian dollar briefly popped above $1.0700 after the Reserve Bank of Australia governor said an increase in interest rates was still likely to be needed to restrain inflation.

  GOLD GAINS

  Safe haven gold extended its gains amid the move out of risky assets and after data showing strong economic growth in China stoked fears of inflation, and as U.S. retail sales fell less than forecast.

  Chinese data showed the world's second biggest economy may avoid a hard landing as some had feared, while a U.S. consumer spending report that was not as weak as expected lifted U.S. stocks , oil and other growth-oriented markets on Tuesday.

  Spot gold was trading slightly firmer at $1,524.64 after rising to $1,525.50 earlier. It is well below a high around $1,575 touched in early May.

  Japan's benchmark Nikkei average ended 0.28 percent higher while the broader Topix posted a similar gain.

  The MSCI index of Asia Pacific shares outside Japan was off 0.1 percent.

  The Korea Composite Stock Price Index gained 0.5 percent.

  Brent crude for August < LCOc2> , which will become the front-month contract after July expires at the end of Wednesday trade, shed 24 cents to $119.11 a barrel by 0439 GMT, while July U.S. crude slipped 30 cents to $99.07.