(Reuters) – European Union leaders, advised by senior officials to prepare contingency plans in case Greece decides to quit the single currency, urged the country to stay the course on austerity and complete the reforms demanded under its bailout program.

After nearly six hours of talks held during an informal dinner, leaders said they were committed to Greece remaining in the euro zone, but it had to stick to its side of the bargain too, a commitment that will mean a heavy cost for Greeks.

“We want Greece to stay in the euro, but we insist that Greece sticks to commitments that it has agreed to,” German Chancellor Angela Merkel told reporters after a Wednesday evening summit in Brussels dragged long into the night.

Three officials told Reuters the instruction to have plans in place for a Greek exit was agreed on Monday during a teleconference of the Eurogroup Working Group (EWG) – experts who work for euro zone finance ministers.

The Greek finance ministry denied there was any such agreement but Belgian Finance Minister Steven Vanackere, said: “All the contingency plans (for Greece) come back to the same thing: to be responsible as a government is to foresee even what you hope to avoid.”

Two other senior EU officials confirmed the call and its contents, saying contingency planning was only sensible.

In its monthly report, Germany’s Bundesbank said the situation in Greece was “extremely worrying” and it was jeopardizing any further financial aid by threatening not to implement reforms agreed as part of its two bailouts.

It said a euro exit would pose “considerable but manageable” challenges for its European partners, raising pressure on Athens to stick with its painful economic reforms.

Greek officials have said that without outside funds, the country will run out of money within two months and there remains the threat that if it crashes out of the euro zone, other member states could be brought down too.

A document seen by Reuters detailed the potential costs to individual member states of a Greek exit and said that if it came about, an “amiable divorce” should be sought with the EU and IMF possibly giving up to 50 billion euros to ease its path.

Although EU leaders’ minds will have been focused by that prospect, disagreements have flared over a plan for mutual euro zone bond issuance and other measures to alleviate two years of debt turmoil, such as giving countries like Spain an extra year to make the spending cuts demanded of them.

“The idea is to put energy into the growth motor. All the member countries don’t necessarily share my ideas. But a certain number expressed themselves in the same direction,” new French President Francois Hollande told reporters.

For the first time in more than two years of crisis summits, the leaders of France and Germany did not huddle beforehand to agree positions, marking a significant shift in the axis which has traditionally driven European policymaking.

Instead, Hollande met Spanish Prime Minister Mariano Rajoy in Paris to discuss policy, before the pair travelled to Brussels by train.

Despite fears Greeks could open the departure door if they vote for anti-bailout parties at a June 17 election, Spain, where the economy is in recession and the banking system in need of restructuring, is at the front line of the crisis.

After meeting Hollande, Rajoy said he had no intention of seeking outside aid for Spain’s banks, which are laden with bad debts from a property boom that bust and still has some way to go before it touches bottom.

But his government said its rescue of problem lender Bankia would cost at least 9 billion euros and it is also seeking ways to help its highly indebted regions meet huge refinancing bills.

SHIFTING SANDS

Socialist Hollande’s election victory has significantly changed the terms of the debate in Europe, with his call for greater emphasis on growth rather than debt-cutting now a rallying cry for other leaders.

That has set up a showdown with conservative Merkel, whose primary objective is budget austerity and structural reform.

At his first EU summit, Hollande chose to make a stand on euro bonds – issuing common euro zone debt – despite consistent German opposition to the idea. “I was not alone in defending euro bonds,” he said.

Merkel showed no sign of dropping her objections to the proposal, which she has said can only be discussed once there is much closer fiscal union in Europe. “There were differences in the exchange about euro bonds,” she said bluntly.

The Netherlands, Finland and some smaller euro zone member states support her.

No major decisions were made at Wednesday’s summit, which was intended to promote ideas on jobs and growth ahead of another meeting at the end of June.

But debate was intense, not just over euro bonds but over how to rescue banks and whether to give more time to struggling euro zone countries to meet their budget deficit goals.

“We haven’t come together to confront each other … but we have to say what we think – what are the right instruments, the right methods, the right steps, the right initiatives to raise growth,” Hollande said.

The leaders discussed broad measures to stem the fallout from a winding up or restructuring of bad banks, EU officials said, with the European Central Bank pressing for the bloc to stand behind its struggling lenders but with Merkel’s approval seen as far from guaranteed.

At the heart of the discussion are proposals from the European Commission for a legal framework to wind up or reorganize insolvent banks so as to avoid a repeat of the multi-trillion-euro taxpayer bailouts during the financial crisis.

Another suggestion is for the euro zone’s rescue funds to be allowed to recapitalize banks directly, rather than having to lend to countries for on-lending to the banks. But that is another idea with which Germany is uncomfortable.

Having rallied on Tuesday, European stocks dropped 2.2 percent as investors priced in a lack of dramatic policy action. The euro tumbled against the dollar to its lowest since August 2010 and Spanish and Italian borrowing costs climbed.

A German two-year debt auction gave a stark illustration of how money is dashing for safe havens. Investors snapped up the 4.5 billion euros of paper on offer even though it came with a zero coupon – offering no return at all.

SEARCH FOR GROWTH

With the euro zone registering no growth in the first quarter and threatening to slip back into recession, policymakers touted three ideas to provide stimulus:

– ‘Project bonds’ backed by the EU budget to finance infrastructure projects alongside private sector investment.

– Doubling the paid-in capital of the European Investment Bank, the EU’s co-financing arm, to a little over 20 billion euros.

– Redirecting structural funds which tend to flow to poorer countries, to other areas where they might reap more immediate growth rewards.

Even if all three proposals were to be activated quickly, economists say they will not provide a sufficient shot in the arm to the euro zone and the wider EU economy.

(Additional reporting by Jan Strupczewski, John O’Donnell, Catherine Bremer and Marine Hass in Brussels and Julien Toyer in Madrid. Writing by Mike Peacock, editing by Anna Willard and Giles Elgood)

(Reuters) – Facebook Inc and banks including Morgan Stanley were sued by the social networking leader’s shareholders, who claimed the defendants hid Facebook’s weakened growth forecasts ahead of its $16 billion initial public offering.

The defendants, who also include Facebook Chief Executive Officer Mark Zuckerberg, were accused of concealing from investors during the IPO marketing process “a severe and pronounced reduction” in revenue growth forecasts, resulting from increased use of its app or website through mobile devices. Facebook went public last week.

The lawsuit was filed in U.S. District Court in Manhattan on Wednesday, according to a law firm for the plaintiffs. A day earlier, a similar lawsuit by a different investor was filed in a California state court, according to a law firm involved in that case.

In the New York case, shareholders said research analysts at several underwriters had lowered their business forecasts for Facebook during the IPO process, but that these changes were “selectively disclosed by defendants to certain preferred investors” rather than to the public generally.

“The value of Facebook common stock has declined substantially and plaintiffs and the class have sustained damages as a result,” the complaint said.

Representatives of Facebook and Morgan Stanley did not immediately respond to requests for comment.

Facebook shares fell 18.4 percent from their $38 IPO price in the first three days of trading, reducing the value of stock sold in the IPO by more than $2.9 billion.

(Reporting by Dan Levine in San Francisco and Jonathan Stempel in New York; Editing by Gerald E. McCormick and Lisa Von Ahn)

(Reuters) – New single-family home sales rose solidly in April and prices pushed higher, offering further evidence the housing market was turning the corner.

The Commerce Department said on Wednesday sales increased 3.3 percent to a seasonally adjusted 343,000-unit annual rate after a 332,000-unit pace in March.

The report, whose details were fairly bullish, came on the heels of news on Tuesday that home resales hit a two-year high in April and suggested the housing market recovery was gaining traction.

It also highlighted the economy’s underlying strength, even though job growth has slowed in recent months. The weak housing market had been the Achilles heel of the economy’s recovery from the 2007-09 recession.

“It’s encouraging. These are signs that we might be forming a bottom in housing,” said Omer Esiner, chief analyst at Commonwealth Foreign Exchange in Washington. “We’ll need to see housing shore up before we can talk about a meaningful recovery in the U.S.”

Stocks opened lower on worries about Greece’s debt problems, while Treasury debt prices rose. The dollar extended gains against the euro after the home sales data.

Compared to April last year, new home sales were up 9.9 percent. Signs of life in the housing market were also bolstered by a 4.9 percent rise in the median price of a new home last month to $235,700 from a year ago.

A separate report from the Federal Housing Finance Agency showed house prices rose 1.8 percent in March after gaining 0.3 percent in February. Prices were up 2.7 percent from year ago.

The improving housing market picture helped Toll Brothers Inc, the largest luxury home builder, report a higher-than-expected quarterly profit and a strong jump in new orders.

“The spring selling season has been the most robust and sustained since the downturn began,” Chief Executive Douglas Yearley said in a statement.

Despite the rise in sales, the housing market continues to be hamstrung by an oversupply of previously owned homes on the market – especially from foreclosures, many of which sell well below their market value.

A separate report from the Mortgage Bankers Association showed applications for loans to buy houses fell for a second week in a row last week, even though mortgage rates dropped to a record low.

While the inventory of new homes on the market rose 1.4 percent to 146,000 units last month, it remained near record lows. At April’s sales pace it would take 5.1 months to clear the houses from the market, down from 5.2 months in March.

New home sales last month were buoyed by a 28.2 percent jump in the Midwest. Sales in the Northeast rose 7.7 percent, to the highest level in over a year, while in the West sales soared 27.5 percent. Sales were down 10.6 percent in the South.

New home sales account for about 7.6 percent of the overall housing market and face stiff competition from previously the owned home segment despite low levels of stock.

(Editing by Neil Stempleman)

(Reuters) – Best Buy Co Inc (BBY.N) reported better-than-expected quarterly results and maintained its outlook for the year as a turnaround plan started to take hold, sending shares in the world’s largest consumer electronics chain up more nearly 4 percent.

The stronger results eased concerns about the future of the retailer after Chief Executive Brian Dunn resigned abruptly last month amid a probe into allegations of personal misconduct.

Critics are also worried that Best Buy is serving as a showroom for Amazon.com Inc (AMZN.O) and other online retailers.

“Best Buy is in a turnaround, and the strategic priorities we laid out at the beginning of the year are just the first phase of the changes to come,” Interim CEO Mike Mikan said. “We know we have to better adapt to the new realities of the marketplace.”

Sales rose 2.1 percent to $11.61 billion, beating the analysts’ average estimate of $11.52 billion.

Net earnings fell to $161 million, or 47 cents a share, for the quarter ended May 5, from $255 million, or 64 cents a share, a year earlier. Excluding items, it earned 72 cents a share, beating the average estimate of 59 cents.

Best Buy’s results were also helped by a lower tax rate and strength in its U.S. online segment.

The company maintained its fiscal 2013 outlook, seeing earnings of $3.50 to $3.80 a share, excluding restructuring costs.

Shares rose 3.7 percent to $18.85 in premarket trading.

(Reporting By Dhanya Skariachan; editing by Jeffrey Benkoe)

(Reuters) – Home resales rose in April to their highest annual rate in nearly two years and a falloff in foreclosures pushed prices higher, hopeful signs for the country’s economic recovery.

The National Association of Realtors said on Tuesday that existing home sales increased 3.4 percent to an annual rate of 4.62 million units last month, the highest since May 2010.

“The housing market is showing some signs of life,” said Gary Thayer, a macro strategist at Wells Fargo Advisors in St. Louis.

Nationwide, the median price for a home resale jumped to $177,400 in April, up 10.1 percent from a year earlier. That was the biggest year-over-year increase since January 2006.

Prices rose in large part because a drop in foreclosures led to fewer distressed sales, said NAR economist Lawrence Yun.

At the same time, Yun said some seasonal factors might have also played a role in the price increase, because families tend to buy in the spring, which means bigger homes comprise a larger share of total sales.

Yun still thinks overall price increases in 2012 will be muted, rising between 1 percent and 2 percent.

U.S. stocks rose as investors bet the data was another sign the housing market may be on the road to recovery. U.S. Treasuries prices fell.

The housing market has been one of the economy’s weakest links as it recovers from the 2007-09 recession, but data in recent months has raised hopes the sector has touched bottom.

The U.S. government said last week that groundbreaking for U.S. homes rebounded in April, which helped to dampen fears that the recovery in the world’s largest economy was stagnating after tepid job growth last month.

While job creation has slowed in recent months, Yun said it was enough to get more people buying homes.

“Now with the jobs creation and high affordability this is a very good combination,” he said.

March’s sales pace was revised marginally lower to 4.47 million units from the previously reported 4.48 million units. Economists polled by Reuters had expected sales at a 4.60 million-unit sales pace last month.

Inventories rose to 2.54 million, which Yun also attributed to seasonal factors. April tends to be one of biggest months of the year for new homes going on the market, he said.

(Additional reporting by Ellen Freilich in New York; Editing by Andrea Ricci)

(Reuters) – In the run-up to Facebook’s $16 billion IPO, Morgan Stanley, the lead underwriter on the deal, unexpectedly delivered some negative news to major clients: The bank’s consumer Internet analyst, Scott Devitt, was reducing his revenue forecasts for the company.

The sudden caution very close to the huge initial public offering, and while an investor roadshow was underway, was a big shock to some, said two investors who were advised of the revised forecast.

They say it may have contributed to the weak performance of Facebook shares, which sank on Monday – their second day of trading – to end 10 percent below the IPO price. The $38 per share IPO price valued Facebook at $104 billion.

The change in Morgan Stanley’s estimates came on the heels of Facebook’s filing of an amended prospectus with the U.S. Securities and Exchange Commission (SEC), in which the company expressed caution about revenue growth due to a rapid shift by users to mobile devices. Mobile advertising to date is less lucrative than advertising on a desktop.

“This was done during the roadshow – I’ve never seen that before in 10 years,” said a source at a mutual fund firm who was among those called by Morgan Stanley.

JPMorgan Chase and Goldman Sachs, which were also major underwriters on the IPO but had lesser roles than Morgan Stanley, also revised their estimates in response to Facebook’s May 9 SEC filing, according to sources familiar with the situation.

Morgan Stanley declined to comment and Devitt did not return a phone message seeking comment. JPMorgan and Goldman both declined to comment.

Typically, the underwriter of an IPO wants to paint as positive a picture as possible for prospective investors. Investment bank analysts, on the other hand, are required to operate independently of the bankers and salesmen who are marketing stocks – that was stipulated in a settlement by major banks with regulators following a scandal over tainted stock research during the dotcom boom.

The people familiar with the revised Morgan Stanley projections said Devitt cut his revenue estimate for the current second quarter significantly, and also cut his full-year 2012 revenue forecast. Devitt’s precise estimates could not be immediately verified.

“That deceleration freaked a lot of people out,” said one of the investors.

Scott Sweet, senior managing partner at the research firm IPO Boutique, said he was also aware of the reduced estimates.

“They definitely lowered their numbers and there was some concern about that,” he said. “My biggest hedge fund client told me they lowered their numbers right around mid-roadshow.”

That client, he said, still bought the issue but “flipped his IPO allocation and went short on the first day.”

“VERY UNUSUAL”

Sweet said analysts at firms that are not underwriting IPOs often change forecasts at such times. However, he said it is unusual for analysts at lead underwriters to make such changes so close to the IPO.

“That would be very, very unusual for a book runner to do that,” he said.

The lower revenue projection came shortly before the IPO was priced at $38 a share, the high end of an already upwardly revised projected range of $34-$38, and before Facebook increased the number of shares being sold by 25 percent.

The much-anticipated IPO has performed far below expectations, with the shares barely staying above the $38 offer price on their Friday debut and then plunging on Monday.

Companies do not make their own financial forecasts prior to an IPO, and underwriters are generally barred from issuing recommendations on the stock until 40 days after it begins trading. Analysts often rely on guidance from the company in building their forecasts, but companies doing IPOs are not permitted to give out material information that is not available to all investors.

Institutions and major clients generally enjoy quick access to investment bank research, while retail clients in many cases only get it later. It is unclear whether Morgan Stanley only told its top clients about the revised view or spread the word more broadly. The firm declined to comment when asked who was told about the research.

“It’s very rare to cut forecasts in the middle of the IPO process,” said an official with a hedge fund firm who received a call from Morgan Stanley about the revision.

(Editing by Jonathan Weber, Martin Howell and Ian Geoghegan)

(Reuters) – The chief executives of Apple Inc and Samsung Electronics Co Ltd were summoned for court-directed mediation on Monday over the iPhone maker’s claims the Korean firm has “slavishly” copied some of its products.

Apple’s Tim Cook and Samsung’s Choi Gee-sung were instructed by a federal judge to appear for a two-day mediation to help resolve the bitter patent litigation between the two companies.

There was no sign of either CEO at the San Francisco federal courthouse on Monday. The mediation session had been on a magistrate judge’s calendar for Monday morning, but the meeting – which is not open to the public – could have been arranged at an undisclosed location, such as a law firm office.

Representatives from Apple and Samsung declined to provide any details on Monday about the meeting.

The U.S. case, the most closely watched in a global patent war between the two companies involving some 20 cases in 10 countries, is set for trial at the end of July in San Jose, California. Each company denies the other’s allegations of patent infringement.

Apple, the maker of the iPod, iPad and iPhone, has a complex relationship with Samsung, a conglomerate that makes computer chips, Galaxy smartphones, and televisions.

While Samsung’s smartphones and tablet computers run on Google’s Android operating system and compete with Apple’s products, Samsung is also a key components supplier to Apple.

The U.S. company, which investors value at close to $600 billion, has accused Samsung of “slavishly” copying the iPhone and iPad through products that run on Android. Samsung, which has a stock market value of about $161 billion, has counter-sued with claims accusing Apple of infringing its patents.

Both companies have a lot at stake. Their share prices hit record highs this year as they reported soaring profits, partly fueled by their dominant position in the smartphone sector.

Samsung sold 44.5 million smartphones in the first quarter of 2012, giving it a 30.6 percent share of the global high-end market. Apple’s sales of 35.1 million iPhones gave it a 24.1 percent share.

“BIG GAP”

On Sunday in Seoul, the head of Samsung’s mobile division said the South Korean company wanted to resolve differences with Apple.

“There is still a big gap in the patent war with Apple,” JK Shin said, before departing for the U.S. mediation talks. “But we still have several negotiation options.”

Apple spokeswoman Kristin Huguet reiterated a prior statement, saying Apple needs to protect its IP against “blatant copying.”

An eventual Apple and Samsung settlement could have wider implications because the U.S. company is locked in disputes with major Android phone makers HTC Corp of Taiwan and Motorola Mobility Holdings Inc of the United States.

Court documents show Apple and Samsung have had at least one mediation session, although it is not clear if Cook and Choi were involved. The latest mediation session will be overseen by U.S. Magistrate Judge Joseph Spero. He declined to comment.

Cook became Apple’s CEO last year, taking over from the company’s co-founder and inspiration, Steve Jobs, who had told his biographer he intended to go “thermonuclear” on Android. Jobs died in October after a long illness.

Cook has echoed Jobs’ mantra that Apple’s top priority is to make “great products” but he has also made his mark by revealing the U.S. company’s production partners and initiating investigations into allegations of labor abuses in its supply chain.

Choi, 61, became Samsung’s leader in 2010, after more than three decades with the company. He is seen as a mentor to Jay Lee, the only son and heir apparent of Samsung Chairman Lee Kun-hee. Choi, asked by reporters on Sunday about the court mediation, declined to comment.

U.S. courts are increasingly demanding parties in civil disputes try mediation, although success if far from certain.

Last year, Oracle’s Larry Ellison and Google’s Larry Page undertook mediation in an intellectual property fight over Android, but no settlement was reached and a trial in the case has entered its sixth week.

“I can’t imagine that the heads of a major enterprise of that kind would take any more seriously a decision of that magnitude, simply because they are in the room together,” said Vaughn Walker, a former northern California federal judge who now works as a mediator.

(Additional reporting by Kim Miyoung in Seoul; Editing by Tim Dobbyn)

(Reuters) – Facebook shares sank on Monday in the first day of trading without the full support of the company’s underwriters, leaving some investors down 25 percent from where they were Friday afternoon.

Facebook’s debut was beset by problems, so much so that Nasdaq said on Monday it was changing its IPO procedures. That may comfort companies considering a listing but does little for Facebook, whose lead underwriter Morgan Stanley had to step in and defend the $38 offering price on the open market.

Without that same level of defense, its shares fell $4.50 to $33.73 in the first 1-1/2 hours of trading. That represented a decline of 11.8 percent from Friday’s close and 25 percent from the intra-day high of $45 a share.

“At the moment it’s not living up to the hype,” Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago said, adding that some people may have decided to hang back and buy the stock on the declines.

“Look at the valuation on it. It might have said ‘buy’ to a few people, but boy it was awfully rich,” he said.

The losses wiped some $19 billion off of the company’s market capitalization — not far from what Chief Executive Mark Zuckerberg was worth personally when the stock debuted.

Volume was again massive, with more than 96 million shares trading hands by 11 a.m. EDT (15OO GMT), making it by far the most active stock on the U.S. market. Nearly 581 million shares were traded on Friday.

“One of the things that we are seeing in Facebook is a lot of emotional trading, in that over the weekend much of the media coverage was negative, and that could be weighing on investors’ decisions to get out of the stock,” said JJ Kinahan, TD Ameritrade’s chief derivatives strategist.

The drop was so steep that circuit breakers kicked in a few minutes after the open to restrict short sales in the stock, according to a notice from Nasdaq.

Shares in other one-time Internet darlings fell in lockstep with Facebook on Monday, with Yelp, LinkedIn and Zynga all lower at mid-morning.

The news was not all bad, though, as the Nasdaq rose 1.2 percent. High-profile tech stocks rose sharply, with Apple up 3.3 percent and Amazon 1.6 percent higher.

As the stock fell, there was a long list of questions — ranging from whether the underwriters priced the shares too high to how well prepared the Nasdaq was to handle the biggest Internet IPO ever — and few immediate answers.

“It was just a poorly done deal and it just so happens to be the biggest deal ever for Nasdaq and they pooched it, that’s the bottom line here,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

NASDAQ CHANGES

Nasdaq said Monday morning the changes it was making would prevent a repeat of what happened Friday, when glitches prevented some traders from knowing for hours whether their trades had been completed.

The exchange also said it would implement procedures to accommodate orders that were not properly executed last week, which could ultimately lead to compensation for some investors.

“It doesn’t instill confidence for clients. Talk about trying to convince them it isn’t a casino,” one Midwestern financial adviser told Reuters on Monday.

Separately, a source said Morgan Stanley’s brokerage arm still had a “large number” of share orders from Friday that were not confirmed, which it was working to resolve.

A Facebook spokeswoman declined to comment on the share price issue.

But analysts said that after the initial frenzy, investors were quickly becoming cautious about the stock.

“Investors are increasingly aware of the risk embedded in the stock price. There are real concerns about growth and advertisers’ frequent lack of certainty how best to use Facebook, along with rising costs and ongoing acquisition risk,” said Brian Wieser at Pivotal Research Group, who has a $30 target on the stock.

“At $38, the stock is priced for perfection in a manner that implied that risks were negligible.”

(Reporting By Chuck Mikolajczak, Jennifer Saba, David Gaffen, Edward Krudy and John McCrank in New York, Doris Frankel in Chicago and Jennifer Merritt in Orlando, Fla.; Writing by Ben Berkowitz in Boston; Editing by Edward Tobin and Maureen Bavdek)

(Reuters) – Shooting from the hip may have got Jamie Dimon into deep trouble — shooting straight may help to get him out of it.

The JPMorgan Chase & Co (JPM.N) CEO made the crisis over the bank’s trading loss of at least $2 billion far worse because he had assured financial markets back in April that news reports about massive bets the bank’s Chief Investment Office had taken were “a tempest in a teapot”.

It meant that when the bank disclosed the big and probably growing loss on May 10, it not only had to admit a sizable problem, but also that it had been misleading investors.

The context of the “tempest” comment changed the whole dynamic of the bank’s response, according to a source familiar with the bank’s thinking. It was one of the main reasons that Dimon was so blunt in admitting just about everything was wrong with the situation — he said the hedging strategy was “flawed,” there was “sloppiness” and that “egregious mistakes” had been made.

The approach gets high marks from crisis communications experts, who said Dimon did the best he could with a bad hand, albeit a hand that he was involved in dealing himself.

His problems may not yet be over. He has agreed to testify before Congress and the bank faces probes by regulators and shareholder lawsuits. But at least getting out in front of the news has made it more difficult for his critics to paint him as a banker-villain.

“One of the tried and true rules of this kind of communication is, if it’s not going to end well, try and end it on your own terms,” said Michael Robinson, of Levick Strategic Communications and a former U.S. Securities and Exchange Commission public affairs and policy chief.

“In 2012, there is, in the court of public opinion, a pretty healthy percentage of people who want to see bankers get their comeuppance. And I think he recognized that and went on there to say ‘OK, the buck stops with me, we made a mistake and we’re responsible, and we’re going to fix it,'” Robinson said.

In response to questions concerning its public relations strategy, the bank said it wanted to be open and honest and admit its mistakes.

Dimon has long been unusual among Wall Street executives for his plain-spoken manner. In the hours after announcing the bank’s loss, Dimon called many journalists to discuss the matter. It was unusual for an executive under fire, but characteristic of Dimon.

“Jamie Dimon came out quick, and that’s a big plus,” said Kenneth Makovsky, the CEO of the public relations firm Makovsky and Company. “Ultimately you’re talking about the reputation of a business and nothing disappears as rapidly as reputation.”

The approach won praise from Lucas van Praag, the former head of Goldman Sachs’s public relations department. Van Praag for years had to defend Goldman’s behavior and comments by the firm’s CEO Lloyd Blankfein from its many critics.

“My observation is that they are trying hard to be open, to minimize any further surprises, take decisive action to correct mistakes, make their most senior executive available, stay calm, and not burn any bridges,” van Praag said in an email.

“From a communication perspective, the approach is smart, although I’m sure their legal team would probably rather pursue a bunker mentality.”

POTENTIAL PITFALLS

Indeed, there may be a downside to the straight talking.

Given the threat of shareholder lawsuits — and several have already been filed — securities lawyers and crisis managers both said executives would be well-served to avoid phrases like “egregious errors.”

The Merriam-Webster dictionary defines egregious as conspicuously bad or flagrant.

Gerry Silk, a plaintiff’s attorney with Bernstein Litowitz Berger & Grossmann LLP in New York, called Dimon’s comments a potential liability.

“‘Egregious’ really represents a departure from anything that would be acceptable conduct, and I think the lawyers are going to carefully focus on that because under the securities laws, such egregious and reckless conduct could lead to a finding of violations – could,” said Silk.

The once teflon CEO is also likely to become a much less formidable lobbyist for the banks in Washington, undermining the industry’s attempts to blunt the effectiveness of expansive regulatory reforms.

Dimon’s effusive apology has also fed suspicion among critics that Dimon is trying to avoid too much focus on the reasons for the loss, which many see as being the result of an aggressive trading mentality in an area the bank was supposed to have been conservatively hedging.

“What they’re really trying to do, I think, is divert attention from the fact that this was not an outlier event, this is normal,” said Chris Whalen, a senior managing director of Tangent Capital Partners in New York and a long-time banking industry analyst. “There’s no way that these guys were hedging. They were trying to make money.”

Some experts also warned that it is too early to say whether JPMorgan’s communications strategy is working.

The bank still faces probes by regulators and the FBI, it still has to explain why it misled investors about the risk that was being taken on by the CIO operation, and it still has to tally up a final loss figure — which will take some time and could easily be north of $3 billion.

“If you’re a high-wire act like that, and you get hit with something like this, you fall completely on your face,” said Fraser Seitel, a public relations consultant who was the public affairs director for Chase Manhattan Bank in the 1980s. “And he recognizes that, I suspect, so it’s going to take a long while for him to be respected and to get his credibility back.”

(Reporting by Edith Honan; Editing by Richard Pullin)

(Reuters) – The United States imposed punitive tariffs on solar panel imports from China, the latest in a series of trade disputes between the world’s two biggest economies and sparking accusations by Beijing of protectionism.

The new tariffs of around 30 percent, much bigger than had been expected, were set on Thursday by the U.S. Commerce Department after it ruled in favor of local firms which said Chinese exporters were dumping cut-price panels on their market.

The size of the tariffs is larger than Chinese companies had expected and some analysts said it might prompt them to manufacture elsewhere or look for alternative markets.

“The U.S. decision lacks fairness and China expresses its strong displeasure”, a spokesman for China’s Ministry of Commerce, Shen Danyang, said in a statement posted on the ministry’s website (www.mofcom.gov.cn).

“By deliberately provoking trade friction in the clean energy sector, the U.S. is sending the world a negative signal about trade protectionism,” Shen said.

However, Beijing stopped short of threatening immediate retaliation.

“We believe these measures by the United States damage China-U.S. cooperation in the renewable and clean energy sectors … We hope the United States can appropriately resolve the relevant issues and take practical steps to respond to China’s demands,” Foreign Ministry spokesman Hong Lei said.

The tariffs apply to most top Chinese exporters, including Suntech Power Holdings Co Ltd and Trina Solar Ltd, at about 31 percent.

President Barack Obama, running for re-election in November, has promised to crack down on what he said are unfair Chinese trade practices.

The United States already has punitive duties on steel pipe, pencils, electric blankets and bedspring imports from China and was also reported in March to be investigating if imports of stainless steel sinks are sold at unfairly low prices.

TRADE DUTIES

Chinese officials have threatened to impose trade duties on U.S. shipments of polysilicon, the key material used in solar panels, if the U.S. moves to penalize Chinese solar companies.

“The anti-dumping ruling increases the risk of retaliatory action by Chinese government on U.S. polysilicon imports into China,” Deutsche Bank said in a report.

The solar panel ruling follows a complaint filed last October by the U.S. subsidiary of Germany’s SolarWorld AG, and six other U.S. companies that alleged unfair competition and had sought duties well above 100 percent.

“The decision sends a clear signal: free trade does not mean there are no rules,” Frank Asbeck, chief executive of SolarWorld told Reuters.

“We expect the U.S. decision will serve as an impulse to the EU,” Asbeck said, adding the company – whose shares rallied as much as 18 percent on the move – was still trying to file a similar complaint in Europe by mid-2012.

DZ Bank analyst Sven Kuerten cautioned: “While the tariff may help SolarWorld in the U.S., the Chinese modules will be sold into other markets, increasing the price pressure there, so we see no huge fundamental improvement for SolarWorld.”

China’s solar companies hold more than 60 percent of the global market. The U.S. market alone accounts for about 20 percent of sales of China’s largest solar panel manufacturers.

Their heavy reliance on subsidized U.S. and European markets has prompted criticism that loans from Chinese state-run banks and low prices gave the companies an unfair advantage.

UNFAIR SUPPORT

Under the decision, 59 Chinese solar companies that petitioned Washington in the case will also face an import duty of about 31 percent, including Yingli Green Energy, LDK Solar, Canadian Solar, Hanwha solar One, JA Solar Holding and Jinko Solar.

Other Chinese companies could now face a 250 percent tariff, although those levels could be altered before the final ruling is issued by the Commerce Department in coming months.

The U.S. ruling, retroactive to cover imports dating back 90 days, comes two months after Washington set more modest tariffs of less than 5 percent on imports from China because of what it deemed Beijing’s unfair support for its solar industry.

Suntech, the world’s largest manufacturer of solar panels, which also operates a panel plant in Arizona, denied it sold below its cost of production.

“All leading companies in the global solar industry want to see a trade war averted. We need more competition and innovation, not litigation,” Andrew Beebe, Suntech’s chief commercial officer, said in a statement.

Yingli Energy and Trina Solar said they would actively defend their position in administrative proceedings.

There was speculation that Chinese companies could circumvent the restrictions by buying Taiwan cells and wafers for panels and assembling them outside the mainland.

“This is positive for Taiwanese players, which can come in and supply solar cells to U.S. panel makers that won’t be buying from the Chinese,” said Keith Li, analyst at CIMB Research.

Chinese companies had been bracing for a punitive duty of 15 percent, analysts said. Some have already started to look for markets beyond Europe and the United States.

“By late last year, we started shifting our focus away from the United States and into other growth markets like Japan,” said Solargiga Energy Chief Financial Officer Jason Chow. “Japan has started offering attractive incentives for solar.”

(Additional reporting by Christoph Steitz in Frankfurt, with Braden Reddall in Houston, Ran Li in Beijing and Twinnie Siu in Hong Kong; Editing by Phil Berlowitz and David Holmes)