SEOUL, July 15 (Reuters) - Foreign direct investment plans received by South Korea during the second quarter fell by 3.3 percent from a year earlier, government data showed on Monday, reflecting in part a decline in investment from Japan.

  The Ministry of Trade, Industry and Energy said that pledged investment from Japan during the second quarter stood at $756 million, less than half of the $1.718 billion recorded a year earlier.

  The ministry said part of the decline was due to the rapid depreciation of the yen stemming from Japan's massive money-printing campaign to beat deflation, but also reflected the high value of Japanese investment pledged in 2012.

  Pledged investment from the European Union more than doubled from a year earlier to $2.049 billion, driven by financial investors such as private equity funds.

  Foreign direct investment plans registered with South Korea stood at $4.604 billion for the April-June period, compared with $4.76 billion a year ago and $3.394 billion during the first quarter of 2013, the ministry said.

  (Reporting by Se Young Lee Editing by Eric Meijer)

SYDNEY, July 15 (Reuters) - Australian shares are set to open higher on Monday, following Wall Street's rally last week on strong earnings and the Federal Reserve's stimulus reassurance, but investors are likely to be cautious ahead of China's GDP data due later on the day.

  * Local share price index futures edged up 0.3 percent, but was still at a 23.9-point discount to the underlying S& P/ASX 200 index close. The benchmark finished 0.2 percent higher on Friday.

  * New Zealand's benchmark NZX 50 index was up 0.2 point to 4,568.5 in early trade.

  * U.S. stocks advanced on Friday, supported by banks' strong earnings, but Boeing limited the Dow's gain after an airplane fire in London.

  * Copper fell on Friday as the dollar firmed and as traders cut risk ahead of Chinese data next week, but the metal remained on track for the biggest weekly gain in two months after the United States signaled it would keep monetary policy loose.

  * Australia plans to scrap its carbon tax and bring forward an emissions trading scheme, Treasurer Chris Bowen said on Sunday, a policy shift certain to be a focal point in the forthcoming election.

  * China is due to report GDP for the latest April-June quarter on Monday, along with other indicators including industrial output and retail sales for June. ----------------------MARKET SNAPSHOT @ 2232 GMT ------------

  INSTRUMENT LAST PCT CHG NET CHG S& P 500 1680.19 0.31% 5.170 USD/JPY 99.22 0.01% 0.010 10-YR US TSY YLD 2.5916 -- 0.000 SPOT GOLD 1293.36 0.71% 9.070 US CRUDE 105.85 -0.09% -0.100 DOW JONES 15464.30 0.02% 3.38 ASIA ADRS 140.62 -0.37% -0.53 -------------------------------------------------------------

  * Wall St rises on banks' results S& P's best week since January * U.S. gasoline jumps on outages, dragging crude higher * Gold posts biggest weekly gain in nearly 2 years * Copper falls on firmer dollar, China GDP data eyed

  For a digest of the day's business stories in Australian newspapers, double click on

  (Australia/New Zealand bureaux +61 2 9373 1800/+64 4 471 4234)

  (Reporting By Maggie Lu Yueyang Editing by Theodore d'Afflisio)

By Ryan Vlastelica

  NEW YORK, July 14 (Reuters) - This week marks the first big week of second-quarter earnings, and it is sure to bring both joy and misery to Wall Street.

  Investors will concentrate on market fundamentals after weeks when Federal Reserve policies have dominated the market. If they see companies are still struggling, stocks could take a fall.

  Even after Fed Chairman Ben Bernanke scared markets in June by telling investors the Fed is likely to reduce monetary stimulus in the coming months, stocks have recovered, with both the Dow and S& P 500 climbing to all-time highs. In an appearance earlier this week, the Fed chairman said monetary policy was likely to be accommodative for some time.

  " We're in the terminal stages of a Bernanke-driven bubble," said Walter Zimmerman, a technical analyst at United-ICAP in Jersey City, New Jersey. " While a lot of damage has been done to the bear case, eventually bad news like weak earnings growth will start to bear fruit."

  To be sure, the Fed, which has shown a much friendlier face to investors lately, will not be out of the picture. Bernanke will appear before congressional committees on Wednesday and Thursday to deliver the semiannual testimony about monetary policy. However, few surprises are expected.

  The S& P's 17.8 percent advance in 2013 is largely attributable to the central bank's accommodative policies. The major indexes made impressive gains in the week: the Dow up 2.1 percent, the S& P 3 percent higher and the Nasdaq up 3.5 percent. It was the third straight week of gains for all three, and the best week for the S& P and Nasdaq since early January.

  " The Fed has been able to prevent a big selloff so far, but eventually the economy will have to catch up to the market or the market will fall back to match the economy," said Scott Armiger, who helps oversee $5.6 billion as portfolio manager at Christiana Trust in Greenville, Delaware.

  MORE FOCUS ON EARNINGS

  That analysts are now turning their focus to earnings, believing the Fed's power to buoy stocks is waning, may not be a positive if the rally is going to continue.

  Earnings are seen growing 2.8 percent in the second quarter, according to Thomson Reuters data, a far cry from the 8.4 percent growth forecast by analysts on Jan. 1. Revenue is now seen increasing 1.5 percent.

  For every company that has said it expects positive earnings, 6.5 have lowered their forecasts, the worst positive-to-negative ratio since the first quarter of 2001.

  United Parcel Service Inc, the world's largest package delivery company, tumbled on Friday after giving a weak profit outlook, citing economic conditions as one reason.

  Companies can appear to look good when they beat a lowered earnings bar, but signs of weakness will hurt a market that is hovering near all-time highs and seeking new catalysts to spur further gains.

  POSITIVE RISK/REWARD

  " The second quarter wasn't particularly robust, and estimates seem to still be too high," said Barry Knapp, managing director of equity research at Barclays Capital in New York.

  " We don't really see any sector where there is a positive risk/reward, just places where there are more likely to be negative surprises."

  In the coming week about 70 S& P 500 companies will report results. If the results indicate that companies' earnings are still weak despite intervention by the world's major central banks, shares could slump.

  General Electric, Verizon, Johnson & Johnson and UnitedHealth are among the biggest names, as are giant tech companies Microsoft Corp, Intel Corp , Google Inc and IBM.

  Financial companies may be the most in view as investors look to reports from Bank of America, Citigroup, Goldman Sachs and Morgan Stanley, among others. The sector is seen posting profit growth of 19.6 percent in the quarter, by far the highest among S& P groups.

  " Since they have the highest growth expectations, it will be especially important for the market that they live up to those expectations," said Sam Stovall, chief investment strategist for Standard & Poor's Equity Research Services in New York. " Those results will be pivotal."

  Early results from financial companies were mixed. Wells Fargo & Co and JPMorgan Chase & Co posted profits that beat forecasts, though JPMorgan said it might be forced to accelerate cost-cutting because of difficult market conditions.

  Among economic reports, June retail sales will be released on Monday, with consumer prices and housing starts, both for June, will be released later in the week. The July Philadelphia Fed survey of manufacturers is due on Thursday.

  Wall St. Week Ahead moves every Sunday. Comments or questions on this one can be sent to ryan.vlastelica(at)thomsonreutrers.com

SINGAPORE, July 15 (Reuters) - London copper prices slipped
on Monday as traders cut risk ahead of key economic data later
in the day that could show China's growth slowed markedly in the
second quarter.

FUNDAMENTALS
* Three-month copper on the London Metal Exchange
had slipped 0.38 percent to $6,927 a tonne by 0111 GMT from
Friday, when it closed down more than half a percent.
* But copper prices finished last week up 2.4 percent in the
biggest weekly gain since early May, partly on hopes the United
States would keep its loose monetary policy for longer.
* The most-traded November copper contract on the Shanghai
Futures Exchange slid 0.72 percent to 49,870 yuan
($8,100) a tonne.
* Markets were spooked last week when China's finance
minister was reported as saying growth could be 7 percent this
year, below the official target of 7.5 percent.
However, the official Xinhua News Agency later corrected
that report to quote Minister Lou Jiwei as saying: " There is no
doubt that China can achieve this year's growth target of 7.5
percent" .
* U.S. Federal Reserve Chairman Ben Bernanke last week said
the U.S. central bank needed to keep stimulative monetary policy
in place given low inflation and an uncertain job market.
* Euro zone factory output fell in May for the first time in
four months, data showed on Friday, suggesting a fragile and
uneven recovery in the bloc that is struggling with record
joblessness.
* Hedge funds and money managers trimmed net shorts in
copper futures and options in the week to July 9, a report by
the Commodity Futures Trading Commission showed.
* For the top stories in metals and other news, click
, or

MARKETS NEWS
* Asian stocks were flat on Monday even after another
robust performance on Wall Street, while commodities and major
currencies were subdued as investors kept to the sidelines ahead
of the numbers from China.

DATA/EVENTS (GMT)
0200 China Q2 GDP
0200 China Industrial output
0200 China Retail sales
0200 China Urban investment
1230 U.S. Retail sales
1230 U.S. New York Fed Empire State survey
1400 U.S. Business inventories

PRICES
Base metals prices at 0111 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 6927.50 -26.50 -0.38 -12.63
SHFE CU FUT NOV3 49870 -360 -0.72 -13.54
HG COPPER SEP3 3.14 -0.01 -0.43 -99.14
LME Alum 1832.50 -10.50 -0.57 -11.52
SHFE AL FUT OCT3 14355 05 +0.03 -6.45
LME Zinc 1892.25 -10.75 -0.56 -8.30
SHFE ZN FUT OCT3 14700 -845 -5.44 -5.44
LME Nickel 13630.00 -120.00 -0.87 -20.55
LME Lead 2061.00 -10.00 -0.48 -11.92
SHFE PB FUT 13875.00 -5.00 -0.04 -9.02
LME Tin 19500.00 0.00 +0.00 -16.67
LME/Shanghai arb^ -476

Shanghai and COMEX contracts show most active months
^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month


($1 = 6.1375 Chinese yuan)

(Reporting by Melanie Burton Editing by Joseph Radford)

SINGAPORE, July 15 (Reuters) - U.S. crude futures slipped in
early Asian trade on Monday on concerns over demand as GDP
growth in the world's No.2 oil consumer China is expected to
have slowed further in the second quarter.
U.S. crude had slipped 18 cents to $105.82 a barrel
by 2326 GMT, while Brent fell 1 cent to $108.80. U.S.
oil settled up $1.04 on Friday and Brent ended $1.08 higher.
Oil had rebounded on Friday, led by the biggest surge in
gasoline futures this year as a string of refinery outages
stoked concerns about fuel supplies in the heart of the U.S.
summer driving season.

FUNDAMENTALS
* Data on Monday is expected to show China's GDP growth
slowed in April-June as weak overseas demand weighed on output
and investment, providing a test for Beijing's resolve to revamp
the world's second-biggest economy.
* The wide divergence of opinion within the U.S. Federal
Reserve over when to wind down its unprecedented support for the
U.S. economy was on full display on Friday, starkly illustrating
Chairman Ben Bernanke's leadership challenge for the rest of
this year.
* South Korea imported 565,444 tonnes of crude oil, 138,000
barrels per day (bpd), from Iran in June, down 23 percent from a
year ago, preliminary data from the Korea Customs Service showed
on Monday.
* Israeli Prime Minister Benjamin Netanyahu said on Sunday
that Iran was getting closer to the " red line" he set for its
nuclear programme and warned the international community not to
be distracted by the crises in Syria and Egypt.

MARKETS NEWS
* The U.S. dollar was marking time early Monday as investors
tensed for the economic data from China that could well set the
near term course for Asian currencies and the Australian dollar.

* U.S. stocks advanced on Friday, supported by banks' strong
earnings, but Boeing limited the Dow's gain after an airplane
fire in London.

DATA/EVENTS
* The following data is expected on Monday:
- 0200 China GDP yy Apr
- 0200 China Industrial output yy Jun
- 0200 China Retail sales yy Jun
- 0200 China Urban investment (ytd)yy Jun
- 1230 U.S. Retail sales mm Dec
- 1400 U.S. Business inventories mm Dec

(Reporting by Manash Goswami Editing by Joseph Radford)

HONG KONG, July 15 (Reuters) - Hong Kong shares were set to start the week weaker on Monday with investors bracing for a fall in China's second-quarter GDP growth, with data due at 0200 GMT, along with June data for retail sales, industrial output and urban investment.

  Economists polled by Reuters expect growth to have slipped to 7.5 percent between April and June, down from 7.7 percent in the first three months of the year. A slew of anaemic data last week stoked fears of a weaker number.

  The official Xinhua news agency on Saturday corrected a dispatch that quoted the finance minister as saying growth could be 7 percent this year, with that figure corrected to 7.5 percent.

  China's total social financing aggregate, a broad measure of liquidity conditions that includes bank loans and bond sales, fell to 1.04 trillion yuan ($169.45 billion) in June, its lowest in nearly a year, from May's 1.19 trillion yuan, according to data released by the People's Bank of China after markets closed on Friday.

  The Chinese central bank will " use a mix of price and quantitative policy tools to adjust liquidity in the banking system and guide steady and appropriate growth in money, credit and social financing" , it said in a statement on its website on Sunday.

  On Friday, the Hang Seng Index ended down 0.8 percent to 21,277.3 points, while the China Enterprises Index of the top Chinese listings in Hong Kong shed 1.2 percent. However, the indices climbed 2 and 2.4 percent on the week respectively.

  Elsewhere in Asia, South Korea's KOSPI was down 0.9 percent at 0020 GMT. Japan's markets are closed for a public holiday.

  FACTORS TO WATCH:

  * The United States won China's acknowledgement of U.S. concerns about cyber theft of intellectual property and commitments to limit subsidies to Chinese state-owned firms during high-level talks this week, the U.S. Treasury said on Friday.

  * Datang International Power Generation Co Ltd said it entered an agreement with Xilinhaote Mining Co to purchase coal worth around 882 million yuan ($143.71 million) for a year starting January 1, 2013.

  * Angang Steel said it expects to post a net profit of about 702 million yuan ($114.42 million) for the first six months of the year, reversing losses for the same period a year ago.

  * Anton Oilfield said its operational plans for the third quarter include the addition of 10 2,000-model pressure pumping equipment and one 5,000-meter model rig. The company also plans to complete the issuance of a second tranche of medium-term notes amounting to 200 million yuan ($32.59 million).

  * Shanghai Pharmaceuticals said some of its directors and senior officers purchased 34,318 of its Shanghai-listed shares priced between 10.68 and 11.45 yuan per share in the secondary market.($1 = 6.1375 Chinese yuan)

(Updates to close)

  SYDNEY, July 12 (Reuters) - Australian shares finished 0.2 percent higher on Friday, as Wall Street closed at record highs, but investor sentiment was dampened ahead of GDP data from China that could show weakness in Australia's largest export market.

  The S& P/ASX 200 index finished the session 8.2 points higher to 4,973.9 after notching a 7-week intra-day high of 5012.5. The benchmark gained 2.7 percent for the week, its biggest gain in 11 weeks.

  New Zealand's benchmark NZX 50 index rose 0.2 percent or 8.3 points to finish the session at 4,568.3. (Reporting by Thuy Ong Editing by Sanjeev Miglani)

HONG KONG, July 12 (Reuters) - Hong Kong shares fell from a one-month high, as investors on Friday trimmed gains in recent outperformers ahead of more China economic data that could disappoint.

  The Hang Seng Index ended down 0.8 percent to 21,277.3 points after closing on Thursday at the highest since June 10. But it rose for a third-straight week, up 2 percent.

  The China Enterprises Index of the top Chinese listings in Hong Kong shed 1.2 percent. It still climbed 2.4 percent this week, its best weekly showing in five months.

  Hong Kong turnover was anemic, 13 percent below its 20-day moving average ahead of Monday's release on China's second-quarter GDP data and June urban investment, industrial output and retail sales figures. Monthly money supply and loan growth data is also due by Monday.

  China's finance minister signalled that Beijing may be willing to tolerate second half economic growth significantly below 7 percent.

(Updates prices. For midday report, double-click
)
SINGAPORE, July 12 (Reuters) - The Singapore dollar fell on
Friday even as the city-state's economic growth in the second
quarter was better than expected with most emerging Asian
currencies lower after weekly gains as investors turned cautious
ahead of China's GDP data next week.
The city-state's currency briefly rose after data
showed Singapore's economy expanded the most in over two years
in the April-June quarter.
It has risen 1.5 percent against the U.S. dollar so far this
week, and if maintained, it would be the largest weekly gain
since the week ended Jan. 27, 2012, Thomson Reuters data showed.
But investors booked profits, partly on doubts over
sustainability of such solid growth for Singapore.
The Indonesian rupiah fell on dollar demand from
importers although the central bank on Thursday raised interest
rates by 50 basis points, twice as much as expected.

The South Korean won ended local trade weaker on
caution over possible intervention by the foreign exchange
authorities to stem further appreciation.
Most regional currencies were set to see weekly appreciation
as Federal Reserve Chairman Ben Bernanke said that the Fed
needed to keep its easy monetary policy in place for the
foreseeable future.
For the week, the won rose 1.6 percent against the dollar.
The Taiwan dollar has gained 1.1 percent, while the Indian rupee
and the Malaysian ringgit have appreciated 0.5
percent.
Still, investors were reluctant to add to long positions in
emerging Asian currencies as they remained wary of China's
second-quarter growth outcome. The data is due on Monday.

CURRENCIES VS U.S. DOLLAR
Change on the day at 0710 GMT
Currency Latest bid Previous day Pct Move
Japan yen 99.05 98.97 -0.08
Sing dlr 1.2619 1.2582 -0.29
Taiwan dlr 29.886 29.952 +0.22
Korean won 1124.35 1122.10 -0.20
Baht 31.14 31.10 -0.13
Peso 43.41 43.32 -0.20
Rupiah 9985.00 9965.00 -0.20
Rupee 59.96 59.68 -0.48
Ringgit 3.1725 3.1680 -0.14
Yuan 6.1388 6.1352 -0.06

Change so far in 2013
Currency Latest bid End prev year Pct Move
Japan yen 99.05 86.79 -12.38
Sing dlr 1.2619 1.2219 -3.17
Taiwan dlr 29.886 29.136 -2.51
Korean won 1124.35 1070.60 -4.78
Baht 31.14 30.61 -1.70
Peso 43.41 41.05 -5.43
Rupiah 9985.00 9630.00 -3.56
Rupee 59.96 54.99 -8.29
Ringgit 3.1725 3.0580 -3.61
Yuan 6.1388 6.2303 +1.49

(Reporting by Jongwoo Cheon Editing by Jacqueline Wong)

* FTSEurofirst 300 down 0.1 pct on day

  * Still manages biggest weekly gain since April

  * Spain hit by energy sector reform concerns

  By Toni Vorobyova

  LONDON, July 12 (Reuters) - European shares edged lower on Friday, with mixed economic data and renewed concerns about the political risks in the euro zone prompting investors to lock in profits at the end of the market's best week since April.

  The FTSEurofirst 300 closed down 0.1 percent at 1,195.45 points, trimming gains for the week to 2.7 percent.

  Sentiment was hurt by news that Portugal's opposition Socialists had demand a renegotiation of the country's bailout terms, and by U.S. data highlighting higher-than-expected inflation against weaker-than-forecast consumer sentiment.

  Investors were also nervous of holding on to positions ahead of the release of Chinese second quarter economic growth, due before the European open on Monday, which will be particularly key to the mining sector.

  " Some of the macro data was not conducive to a positive market and, as it is the end of the week, there is a certain amount of profit-taking ahead of Monday when we get a clear view of what is happening in China," said Brenda Kelly, analyst at IG.

  Basic resources, which had been among the top performers this week, sold off steeply, down 1.3 percent.

  Regionally, the Spanish market was the clear laggard, with the IBEX falling 2.3 percent, as investors fretted about the increased costs for companies from a regulatory overhaul of the energy sector there.

  Renewable power producer Acciona fell 8.5 percent and power grid operator Red Electrica shed 7.5 percent.

  In contrast, strong profits and confirmed outlook from car marker Daimler helped support Germany's DAX, which climbed 6.2 percent.

  From a technical perspective, the divergence between the strong DAX and the weak peripheral indexes such as the IBEX or Portugal's PSI 20 clouded the outlook for the broad European market.

  " Now indexes are not in sync, so we have to wait for synchronicity to have a real trend," said Valerie Gastaldy, technical analyst at Day By Day. " In Europe we are definitely weak, but ... we need to wait for a sell signal."

* Bullard, Plosser reflect range of opinion on bond-buying

  * About half of Fed officials see end to QE this year

  * Bernanke said that would not happen until mid-2014

  * 6.5 pct jobless rate should 'trigger' tightening -Plosser

  * Williams downplays significance of divergent views at Fed

  By Jonathan Spicer

  JACKSON HOLE, Wyo., July 12 (Reuters) - The wide divergence of opinion within the Federal Reserve over when to wind down its unprecedented support for the U.S. economy was on full display on Friday, starkly illustrating Chairman Ben Bernanke's leadership challenge for the rest of this year.

  St. Louis Fed President James Bullard and Charles Plosser, his counterpart at the Philadelphia Fed, sat on the same panel at a conference here, but sang quite different tunes on what to do about the U.S. central bank's massive bond-buying program.

  While Bullard and other more dovish policymakers want to keep buying assets until inflation rises and unemployment drops, Plosser and the more hawkish of the Fed's 19 policymakers want to reduce the pace sooner than later.

  " It is time to exit from the asset purchase program in a gradual and predictable manner," Plosser told the 5th Annual Rocky Mountain Economic Summit.

  After delivering his speech and fielding a few questions from bankers and economists, Bullard told reporters: " I'd like some kind of reassurance that inflation was moving back toward target" before reducing the bond buying.

  It was yet another clue for investors as they try to predict when the Fed will reduce the $85 billion in monthly bond purchases, a policy meant to encourage investing, hiring and overall U.S. economic growth.

  According to minutes of the Fed's June policy meeting, around half of the 19 policymakers gathered there expected to end the quantitative easing program (QE) by late this year, while the other half wanted to keep buying bonds into next year.

  That contrasts with the conditional timeline Bernanke articulated in a news conference after the meeting on June 19, when he said the Fed's 12-member policy-setting committee expects to end QE by mid-2014, as long as economic growth continues as expected.

  While the official statement from the 12-member Federal Open Market Committee made no mention of that timeline, Bernanke said he was speaking on its behalf. The comments prompted a global market selloff, from bonds to stocks to emerging-market currencies, over the following few days.

  Markets have since calmed, and Bernanke on Wednesday reemphasized the Fed's commitment to accommodative policy.

  San Francisco Fed President John Williams, speaking in Vancouver, British Columbia, sought to downplay the importance of the range of views.

  Only a few months ago, Williams himself had called for a stop to bond-buying by the end of the year.

  But inflation has come in lower than he expected, prompting him to make a " small shift" in his own view, so now he fully" supports Bernanke's mid-2014 target.

  " We are probably going to need to have more accommodation than I had been thinking a couple months ago because of the inflation data," he said.

  But the gap between his current view and his old view, which half the Fed officials share, is not a " substantive difference."

  " I don't see these differences as being that big," he said.

  Lower-than-expected inflation helped convince him to make that " small shift" in his policy view, Williams said, adding that exactly when the Fed ends the bond buying program is not as important as making sure the high unemployment rate comes down and undesirably low inflation rises back to the Fed's 2 percent target.

  The policy-setting FOMC is made up of more dovish officials than the broader group of 19. Yet the fact that half, and possibly more than half, of the broader group expect the accommodation to end at least six months ahead of Bernanke's timeline could sow confusion in financial markets.

  " The message continues to breed volatility and eye-rolling criticism of Fed communication efforts," said Eric Green, an interest rate strategist at TD Securities in New York.

  " What we do know is that half of the broader FOMC policy universe wants to end all asset purchases this year and it is a bias hard to dismiss, even if many are non-voters this year," he wrote in a client note.

  INFLATION A GROWING CONCERN

  While Bullard has a vote on policy this year, Plosser regains his vote next year. Bullard dissented at the June meeting due in part to a lack of concern over weak inflation readings.

  Inflation as measured by the Personal Consumption Expenditure (PCE) price index is around 1 percent, below the Fed's 2-percent goal, despite the bond-buying and four-and-a-half years of near-zero interest rates.

  " If inflation went lower than where it is on a PCE basis then the (FOMC) would have to re-think its strategy," Bullard told reporters.

  " The simplest thing to do would be to say that we would stick with the QE program for longer ... until we see inflation coming back to target," he added.

  Plosser, an long-time critic of the bond-buying, told reporters: " I don't think it has been very effective, I think we are taking huge risks ... I would just as soon unwind from that."

  Since Bernanke articulated the QE timeline on June 19, Wall Street economists have increasingly forecast the Fed will reduce the pace of QE at a meeting scheduled for September. There is also one set for the end of this month.

  Also since June 19, longer-term market-based yields have risen sharply before more recently shedding some of those gains. Benchmark 10-year Treasury notes slipped on Friday, with the yield rising again to 2.59 percent.

  WHEN TO TIGHTEN POLICY

  Turning to when the Fed should finally raise interest rates, Plosser argued the central bank should commit to tightening policy when the unemployment rate falls to a 6.5-percent " trigger," instead of just using that level as a rough guidepost for considering a rate rise.

  Plosser's proposal, introduced in his speech on Friday, runs against the grain of most other U.S. monetary policy makers, who have increasingly stressed that rates could well stay near zero well after the U.S. jobless rate hits that level.

  To clarify its future intentions and to give the economy even more support, the Fed said in December it would keep rates that low until unemployment falls to 6.5 percent, as long as inflation expectations did not rise above 2.5 percent. Unemployment was 7.6 percent last month.

  Plosser said these so-called " thresholds," while an improvement, still leave too much room for interpretation. The Fed should " commit to its forward guidance" by treating those levels as " triggers rather than thresholds," he said.

  The " FOMC has offered a variety of changing targets or signals about future behavior," he told the conference, which was hosted by the Global Interdependence Center.

  " Although the aim was to clarify our policy intentions, I believe the repeated changes have likely caused more confusion than illumination."

  The proposal may be a long shot, since influential officials have recently stressed the Fed is in no rush to raise rates.

  On Wednesday, Bernanke renewed his message that policy would remain " highly accommodative" and rates could well stay low even after the jobless rate falls below the threshold.

  " There will not be an automatic increase in interest rates when unemployment hits 6.5 percent," he said.

  On Friday, Bullard said the Fed could even formally lower that threshold, but added that such a move would require more deliberation.

* Dow, S& P 500 end at record highs, buoyed by banks' earnings

  * Boeing's stock falls after Dreamliner fire at Heathrow Airport

  * UPS drops after lowering profit outlook

  * Dow up 0.02 pct S& P 500 up 0.3 pct Nasdaq up 0.6 pct

  By Angela Moon

  NEW YORK, July 12 (Reuters) - U.S. stocks advanced on Friday, supported by banks' strong earnings, but Boeing limited the Dow's gain after an airplane fire in London.

  Both the Dow Jones industrial average and the S& P 500 index ended Friday's session at record closing highs, even though the point and percentage gains for the day were slim. The Nasdaq closed at a 52-week high.

  The S& P 500 scored its best weekly performance since January and a third consecutive week of gains.

  Financial stocks were the day's biggest gainers, with the S& P 500 financial sector index up 0.8 percent.

  " The momentum has been incredibly strong ... At some point, a breather or some sort of consolidation makes sense," said Joe Bell, senior equity strategist at Schaeffer's Investment Research in Cincinnati.

  Over the past three weeks, the benchmark S& P 500 has erased the losses of nearly 6 percent from the selloff triggered by Federal Reserve Chairman Ben Bernanke in late May, when he first raised the prospect of trimming the central bank's $85 billion in monthly bond purchases. Since then, the market has been getting reassurance from Bernanke and other Fed officials that the U.S. central bank will keep monetary policy loose for some time.

  " For now, it seems like some of the comments made this past week have settled the market back into place," Bell said. " Hopefully we'll be back to paying more attention to the earnings reports," which will probably take the spotlight in the next few weeks, he added.

  Shares of Wells Fargo & Co, the biggest U.S. mortgage lender, jumped 1.8 percent to $42.63 after the company posted quarterly results that topped expectations. Citigroup rose 1.5 percent to $50.81. Bank of America climbed 2 percent to $13.78 and ranked among the most actively traded stocks in both the Dow and the S& P 500.

  JPMorgan Chase & Co, the largest U.S. bank by assets, reported a 31 percent jump in quarterly profits. The stock, however, slipped 0.3 percent to close at $54.97, giving up an earlier gain of more than 1 percent. The stock had traded higher for most of the day.

  The Dow Jones industrial average edged up 3.38 points, or 0.02 percent, to end at 15,464.30, a record closing high. The Standard & Poor's 500 Index rose 5.17 points, or 0.31 percent, to finish at 1,680.19, also a closing high. The Nasdaq Composite Index gained 21.78 points, or 0.61 percent, to close at 3,600.08, a 52-week high.

  For the week, the Dow rose 2.2 percent, while the S& P 500 gained 3 percent and the Nasdaq climbed 3.5 percent.

  In Friday's session, Boeing was the Dow's biggest decliner. Boeing shares fell 4.7 percent to $101.87 after a Dreamliner operated by Ethiopian Airlines caught fire at Britain's Heathrow airport on Friday.

  Shares of Dreamliner component manufacturers also slipped, including Honeywell International, off 0.2 percent at $82.37, and Spirit Aerosystems, down 2.3 percent at $22.61.

  United Parcel Service was among the biggest losers in the S& P 500, sliding 5.8 percent to $86.12, after the world's No.1 package delivery company said second-quarter profit would fall short of expectations. Shares of rival FedEx Corp fell 2 percent to $102.29.

  UPS weighed on the S& P industrial sector index, which fell 0.6 percent.

  Analysts expect S& P 500 companies' second-quarter earnings to have grown 2.8 percent from a year earlier, with revenue up 1.5 percent, data from Thomson Reuters showed.

  U.S.-listed shares of Infosys jumped 4.8 percent to $46.17 after the company reported quarterly results and maintained its revenue growth forecast.

  On the economic front, the Thomson Reuters/University of Michigan's preliminary reading for July on the consumer sentiment index was 83.9, down from 84.1 in June and shy of forecasts for 85.

  About 5.4 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the 6.4 billion daily average so far this year.

  On the NYSE, advancers narrowly beat decliners with 1,488 stocks rising and 1,478 shares falling. On the Nasdaq, nearly 14 stocks rose for every 11 that fell.

* MSCI stock index up 3.4 pct for week, best week since
November
* Dollar bounces, but posts loss for week
* S& P 500, Dow hit closing highs for 2nd day


By Caroline Valetkevitch
NEW YORK, July 12 (Reuters) - Stocks on major bourses posted
their best weekly gains since November on Friday, helped by
corporate earnings reports and remarks by Federal Reserve
officials calming investor fears about U.S. monetary policy.
On Wall Street, the Dow and S& P 500 hit all-time closing
highs for a second day, and the S& P 500 rose for a seventh
straight day, matching a winning streak from March. The index
climbed 3 percent for the week, its best weekly percentage gain
since early January.
Stocks, bond prices and commodities have rallied this week
while the dollar tumbled on hints from Federal Reserve chief Ben
Bernanke that the U.S. central bank was unlikely to phase out
its stimulative bond buying before the U.S. unemployment rate
improved further.
" The momentum has been incredibly strong ... At some point,
a breather or some sort of consolidation makes sense," said Joe
Bell, senior equity strategist at Schaeffer's Investment
Research in Cincinnati.
The MSCI world index was up 0.1 percent for
the day and 3.4 percent for the week, its best weekly percentage
gain since November, while the broad FTSEurofirst 300
ended down 0.1 percent.
The Dow Jones industrial average ended up 3.38
points, or 0.02 percent, at 15,464.30. The Standard & Poor's 500
Index was up 5.17 points, or 0.31 percent, at 1,680.19.
The Nasdaq Composite Index was up 21.78 points, or 0.61
percent, at 3,600.08.
Stronger-than-expected results from top U.S. banks JPMorgan
Chase and Wells Fargo helped boost the market,
while shares of United Parcel Service Inc. dragged on
the S& P 500 after a disappointing outlook. UPS, the world's
biggest package delivery company, and smaller rival FedEX
are considered economic bellwethers because of the high
volume of goods they move around the world.
Boeing shares, also a drag, fell 4.7 percent to
$101.87 after a Dreamliner operated by Ethiopian Airlines caught
fire at Britain's Heathrow airport on Friday.
Investors were nervous about holding onto positions ahead of
the release of Chinese second-quarter economic growth data, due
before European markets open on Monday, which will be
particularly important to the mining sector.
After a week of swings in the world's big currencies,
foreign exchange markets traded more calmly.
The dollar index, which measures the greenback's
performance against a basket of major currencies, was up 0.2
percent. It was down 1.8 percent for the week, its worst decline
since early June.
" There is some argument for suggesting that the shock effect
of a dovish Bernanke has largely been digested," said Alan
Ruskin, global head of foreign exchange strategy at Deutsche
Bank in New York.
" Even if he tries to avoid changing his tone, any policy
surprises are more likely to be in a positive dollar direction
than the reverse," he said.
U.S. Treasuries prices slipped on profit-taking and
pre-weekend position-squaring. Benchmark 10-year Treasury notes
were unchanged in late trade, yielding 2.59 percent.
Earlier, they were up as much as 15/32, with a yield of 2.518
percent.

GOLD EASES, OIL CLIMBS
Gold eased for the day but notched its biggest weekly
advance in nearly two years.
Analysts said, however, that recent gains in U.S. equities
amid some positive signs for the economy and no indications of
abatement in outflows from gold-backed exchange-traded funds
could pressure the metal.
" The fact that the leading U.S. equity indices closed at
record highs yesterday - which could prompt investors to switch
once again from gold ETFs to equities - is problematic for
gold," said Eugen Weinberg, head of commodity research at
Commerzbank.
Many commodity markets have had a strong run this week as
talk of continued central bank support has bolstered hopes of a
pickup in global growth.
Oil prices ended with sharp gains for the day, led by the
biggest surge in gasoline futures this year as a string of
refinery outages stoked concerns about fuel supplies.
Brent climbed $1.08 to settle at $108.81 while U.S. crude
oil rose $1.04 to settle at $105.95 a barrel.

PORTUGAL TENSIONS
Portuguese government bonds fell again after
Lisbon requested a delay in the next review of a bailout program
due to the country's political crisis.
Tensions were reignited this week after Portugal's president
threw out plans that seemed to have patched up a government rift
and instead demanded some kind of grand coalition, which would
include opposition Socialists, who have been calling for snap
elections.