(Reuters) – The Commodity Futures Trading Commission (CFTC) has opened an investigation into possible wrongdoing at JPMorgan Chase & Co in connection with the bank’s multi-billion-dollar trading loss, a source familiar with the probe told Reuters.

The agency will soon disclose the existence of the investigation, the source said on Friday.

Earlier on Friday, the New York Times reported that the CFTC had opened an enforcement case, quoting people briefed on the matter.

The CFTC would join the FBI and the U.S. Securities and Exchange Commission among federal agencies examining the loss, which the largest U.S. bank said last week was at least billion.

The CFTC has disclosed an investigation into last October’s collapse of MF Global Holdings Ltd , a futures and commodities brokerage from where large sums of customer money remain missing.

JPMorgan spokesman Joe Evangelisti declined to comment. The CFTC did not immediately respond to a request for comment.

The bank has not been accused of wrongdoing, and the newspaper said all of the investigations into its trading loss are preliminary.

CFTC Chairman Gary Gensler is expected to reveal his agency’s investigation when he testifies before the Senate Banking Committee on Tuesday, the newspaper said.

JPMorgan Chief Executive Jamie Dimon is also expected to testify before that committee, after hearings on Wall Street reforms that are expected to end on June 6.

The CFTC began tracking JPMorgan’s trading in April, the newspaper said, when reports surfaced that London-based trader Bruno Iksil was taking big bets in credit derivatives.

Its probe may examine whether the bank’s trading affected that market, the newspaper said.

(Reporting By Jonathan Stempel in New York and Alexandra Alper in Washington,; Editing by Daniel Magnowski)

Rating agency Fitch has downgraded five Greek banks, as the FTSE 100 takes a hit over expanding eurozone uncertainty.

The banks, including the National Bank of Greece, have been dropped from ‘B-’ to ‘CCC’ – matching the downgrade of state-guaranteed issues on May 17.

The uncertainty in Greece and expanding fears in the Spanish bank sector hammered world stock markets in Friday’s trading. A total of 16 Spanish banks were also downgraded.

In London, the FTSE 100 lost 1.3% or 70 points to close at 5267- meaning it had suffered five consecutive days of falls.

Part-nationalised banks Lloyds and RBS, were the biggest losers, dropping 6.15% and 5%, respectively.

It means the index closed at its lowest level since November last year – and has lost almost £80bn in the year to date – £18bn of that on May 18.

Across Europe the losses were tempered, in part, by rumours of a looming ban on the short-selling of financial stocks in Madrid.

The German DAX closed 0.6% down, the CAC in Paris was 0.1% lower while there were falls of 0.3% and 0.4% for the Italian MIB and IBEX in Spain respectively.

In Asia, Japan’s Nikkei had earlier shed 3% of its value. The NYSE composite was also down in early Friday trading.

Tackling the crisis of confidence on the euro is set to dominate the G8 talks in the US this weekend.

It was the downgrades for the Spanish banks by Moody’s last night that had the biggest resonance with investors as trading began.

The move – which included the eurozone’s largest, Banco Santander – was due to a weak economy and the government’s reduced ability to support struggling lenders, Moody’s said.

Santander reacted to the decision by saying it would have no impact on its UK division which had little exposure to the problems in Spain.

Its statement said:”The change to Moody’s credit rating of Santander UK plc has no impact on our businesses in the UK or our plans for future growth.

“Santander UK plc is an autonomous subsidiary of the Santander Group, with more than 90% of its total assets held in the UK and a Eurozone sovereign exposure of less than 1% of assets.”

Sky’s City Editor Mark Kleinman also pointed out that customer deposits – like those of other UK lenders – are protected by the Financial Services Compensation Scheme.

All the 16 Spanish banks’ long-term debt ratings were downgraded by at least one notch, and some suffered three-notch cuts.

Bankia – which is Spain’s fourth largest lender and was recently part-nationalised – had bigger problems to contend with.

Its shares plunged 27% at one stage on Thursday after Spanish newspaper El Mundo reported 1bn euros (£800m) worth of deposits had been withdrawn in the last week.

The Spanish Government and the bank’s chairman both released statements denying a run had taken place, in an attempt to stop the siege on its share price.

That has had an effect – with Bankia’s value recovering much of that ground today.

Spain’s banks have been dogged by bad loans arising from the collapse of the country’s property bubble.

The Spanish government has hired Goldman Sachs to value Bankia and is due to make a separate announcement on naming independent auditors to examine bad loans and property holdings in the financial sector.

The moves are aimed at determining how big a state bailout is needed.

The Spanish Central Bank has acknowledged that bad loans among the country’s lenders have hit an 18-year high – such is the scale of the crisis.

The pressure on them has intensified over contagion from Greece and the Spanish prime minister Mariano Rajoy has appealed for the eurozone to come together to solve the Greek problem and ease the siege on his own nation.

LONDON (Reuters) – G4S , the world’s biggest security group, said John Connolly, chairman of British group AMEC , will succeed Alf Duch-Pedersen as chairman at the group’s annual meeting on June 7.

Connolly has spent most of his career at professional services firm Deloitte, culminating in four years as global chairman from 2007-11.

“There are many opportunities for the group to expand its geographic presence and to maximise the potential for outsourced services across its key sectors,” Connolly said in a statement.

(Reporting by Paul Sandle; Editing by Dan Lalor)

HONG KONG (Reuters) – London jeweller Graff Diamonds has set an indicative price range of HK-HK a share for a proposed Hong Kong initial public offering of up to billion (632 million pounds), the biggest IPO so far this year in the financial hub, two sources with knowledge of the plans said on Friday.

Graff plans to sell 0 million of new shares and another 0 million in existing shares, said the sources, who were not authorized to speak publicly on the matter. The jeweller is offering between 211 million and 312 million shares, one source added.

(Reporting by Elzio Barreto; Editing by Denny Thomas and Ryan Woo)

TOKYO (Reuters) – Asian shares tumbled on Friday and were set for their worst weekly showing since September, amid signs of growing instability among Spanish banks and political turmoil in Greece, with investors adding the latest weak U.S. data to the list of risk factors.

MSCI’s broadest index of Asia-Pacific shares outside Japan plummeted as much as 2.4 percent to a new four-month low, after snapping a four-day losing streak on Thursday, and was on track for its worst weekly performance in nearly eight months with a weekly loss exceeding 5 percent.

The index has shed about 11 percent in May, erasing nearly all its gains for the year.

Concerns over weak demand dragged the materials sector down 2.6 percent, while worries about a global growth slowdown sent the growth-sensitive technology sector tumbling 2.7 percent and industrials down 2.4 percent.

Japan’s Nikkei stock average slumped 2.3 percent.

“There is no resolution to the (European) problem yet, and we also we had a very disappointing U.S. data, so overall, it’s negative and further denting market sentiment,” Frances Cheung, senior strategist for Asia ex-Japan at Credit Agricole CIB in Hong Kong.

Cheung said that in the current environment, high yield bonds may be more vulnerable and high beta currencies – riskier but with higher potential returns – such as the won and the ringgit could suffer more in the short term.

Global stocks fell for a fifth day, and the Standard & Poor’s 500 index closed at a four-month low on Thursday.

U.S. data showed manufacturing in the mid-Atlantic states unexpectedly contracted in May, and new claims for jobless benefits last week held at levels suggesting slow growth in hiring.

STRESS LIFTS BONDS

High stress levels were carried over to Asian credit markets on Friday, sharply widening the spread on the iTraxx Asia ex-Japan investment-grade index by 11 basis points to its widest level since mid-January.

Reflecting mounting risk aversion, the CBOE VIX Volatility index, a gauge of investor anxiety that measures expected volatility in the Standard & Poor’s 500 index over the next 30 days, rose nearly 1 percent to close at a five-month high of 24.49 on Thursday.

Concerns about growth plus Europe’s worsening financial woes have given momentum to the flight to safety, pushing the 10-year Japanese government bond yield to its lowest since July 2003 at 0.815 percent on Friday.

The yen, favoured as a safer asset, eased from its highs on Friday against the euro and the dollar.

The euro inched up 0.1 percent to 100.70 yen, off its lowest since February 7 of 100.54 yen which it touched on Thursday, while the dollar held at 79.42 yen, also above a three-month low of 79.13 yen hit on Thursday.

But the euro marked a fresh four-month low of .26661 early on Friday and was expected to stay under strong selling pressure.

“Financial and asset market divergence in the Eurozone is likely to make the EUR (euro) less attractive to reserve managers, in our view,” Morgan Stanley said in a research note.

“The shrinking pool of available higher-rated assets suitable for central bank reserves suggests that the EUR’s weighting in reserves is likely to be questioned,” it said.

That would imply that the motivation to buy the euro for purposes of diversification is declining, leaving the single currency increasingly vulnerable, Morgan Stanley said.

EUROPEAN WOES HURT OIL

U.S. June crude oil was flat at .56 a barrel after settling at the lowest level since November 2 as the U.S. data raised concerns over demand. Brent crude eased 0.1 percent to 7.34, after sliding more than 2 percent on Thursday to settle at its lowest since December 30 on concerns over turmoil in Greece.

Spot gold ticked up 0.2 percent to ,575.91 an ounce on Friday, after rallying more than 2 percent for its largest one-day gain in more than three months in the previous session, with sluggish U.S. data fuelling hopes for more monetary easing.

But gold was set to drop for a third straight week on mounting concerns over the euro zone debt crisis.

Financial instability in Spain deepened, with Moody’s Investors Service cutting the long-term and deposit ratings of 16 Spanish banks, just as the Spanish government’s takeover of Bankia this month has raised the prospect of more state bailouts for banks and pushed the country’s borrowing costs higher.

Also on Thursday, Fitch downgraded Greece deeper into junk territory, citing the risk that the heavily indebted country might leave the euro zone.

A poll on Thursday, the first conducted since talks to form a government collapsed and a new election was called for June 17, showed Greek voters were selecting pro-bailout parties, which would soothe European leaders who say that without the bailout Greece would be headed for bankruptcy and falling out of the common currency.

(Editing by Alex Richardson)

NEW YORK/SAN FRANCISCO (Reuters) – Facebook Inc priced its initial public offering at the top of its target range to raise more than billion (10/13 billion pounds), as strong demand, particularly from retail investors, fuels anticipation of a big pop in the stock when it begins trading Friday on the Nasdaq.

Predictions of how much the stock will rise on its first day of trade vary greatly — some experts said the high IPO price and increased float could limit gains to 10 percent to 20 percent, while others said anything short of a 50 percent jump would be disappointing given the hype.

“I think anything over 50 percent will be considered a successful offering — anything under that would be underwhelming,” said Jim Krapfel, analyst at Morningstar. “A lot of retail investors are not concerned about valuation. That’s what is going to drive the first day pop.”

Facebook is selling a 15 percent stake priced at a share, giving the world’s largest online social network a valuation of 4 billion.

That puts the eight-year-old company, founded in a Harvard dorm room by Chief Executive Mark Zuckerberg, a valuation akin to that of Amazon.com Inc and exceeding that of Hewlett-Packard Co and Dell Inc combined.

In an event that many say is as much a cultural phenomenon as it is a business story, Facebook will make its Wall Street debut at around 11 a.m. on Friday on the Nasdaq.

Investor enthusiasm for Facebook shares comes despite questions about the company’s long-term money-making capabilities, particularly after it reported a quarter-to-quarter revenue slide in April.

“Hundreds of millions of people are extremely passionate about this product. A lot of those people want to be a part of this event, of this company that they have an affinity for. That’s creating a level of excitement for the stock that you don’t normally see,” said Steve Weinstein, an analyst with ITG Research.

Facebook, with some 900 million users, raised the target IPO price range on Tuesday to between and per share, from between and . More than half of the proceeds of the offering will go to existing shareholders, including early backers such as Accel Partners and Russia’s DST Global.

Facebook could raise north of .4 billion if a green shoe option for underwriters is exercised, making the IPO the second-largest in U.S. history, after that of Visa Inc.

Some investors expected Facebook to price the offering at per share. However, the Nasdaq Composite Index fell by more than 2 percent on Thursday, quelling such speculation.

“It probably would have gone at if the market was not horrible,” said Scott Sweet of research firm IPO Boutique. “I expect it to open at a nice premium, but I don’t expect a LinkedIn-type performance because of the sheer size of this IPO. They have to move a lot of stock and there will be a lot of selling.”

Shares of professional networking company LinkedIn Corp doubled on their first day of trading.

Lee Simmons, industry specialist at Dun & Bradstreet, forecast a 10 percent to 20 percent gain for Facebook on Friday.

“You’ve got a large offering at an increased price, so a huge pop may be difficult to achieve,” Simmons said. “When you’re talking about doubling or a pop the size of LinkedIn, it’s more difficult to achieve because Facebook is just offering more shares … The others were smaller floats, under 10 percent, so you had this artificial feeding frenzy.”

On Wednesday, Facebook increased the size of the IPO by almost 25 percent to 421 million shares, a 15 percent float. The green shoe, if exercised as expected, would expand the float to 18 percent.

Another social media company, Zynga Inc, an online games developer that makes lots of games for Facebook users, fizzled in its debut and ended down 5 percent on its first day of trading. No one Reuters spoke with said Facebook’s stock would fall on Friday.

CHALLENGES REMAIN

Facebook will celebrate its Wall Street debut with an all-night “hackathon” at its Menlo Park, California, headquarters starting on Thursday evening, a company tradition in which computer programmers work on side projects that sometimes turn into mainstream offerings.

Despite the high expectations, Facebook faces challenges maintaining its growth momentum.

Some investors worry the company has not yet figured out a way to make money from the growing number of users who access Facebook on mobile devices such as tablets and smartphones. Meanwhile, revenue growth from Facebook’s online advertising business, which accounts for the bulk of its revenue, has slowed in recent months.

Would-be investors have been warned by some financial advisers against jumping into Facebook right away, but the well-known brand could still attract enough interest to exceed the 458 million shares traded the day General Motors went public after emerging from bankruptcy in 2010.

One UBS adviser initially received calls from 12 clients clamouring to buy shares of Facebook, but over the past couple of weeks, two have changed their minds.

“A lot of people are thrown off by the recent negative stories in the press,” the adviser said, speaking on condition of anonymity. “One guy was worried about General Motors stopping its advertising on Facebook.”

GM said on Tuesday it would stop placing ads on Facebook, raising questions about whether the display ads on the site are as effective in reaching consumers as traditional media.

Overall, financial advisers are struggling to manage clients’ expectations about what the stock will do and in some cases, if they will be able to get any stock for them.

“People want to just own it because they think it’s the next Google and they missed out on that,” said a financial adviser from Wells Fargo Advisors, the brokerage division of Wells Fargo & Co, which is part of the syndicate underwriting the deal.

Facebook has 33 underwriters for the IPO, led by Morgan Stanley, JPMorgan and Goldman Sachs.

(Additional reporting by Jessica Toonkel and David Gaffen in New York, Alexei Oreskovic and Edwin Chan in San Francisco; Editing by Tiffany Wu, Phil Berlowitz and Steve Orlofsky)

MADRID (Reuters) – Highly indebted Spanish region Catalonia said on Thursday it had reached a deal with the central government on spending cuts as Spain races to control finances in its autonomous communities and reassure investors it can meet fiscal targets.

Another region, Valencia, which paid a high price to issue short-term debt earlier this month, hinted its spending plans would also be approved by the central government on Thursday and called for the state to underwrite its bonds by the summer.

All 17 highly-devolved Spanish regions were meeting with Treasury Minister Cristobal Montoro to seek approval for their revenue and spending plans for this year or face intervention by the central government.

Spain’s biggest risks are its troubled banking system and overspending regions as it tries to prove it is fiscally healthy and keep from being dragged deeper into the euro zone debt crisis.

“I can confirm that the plan will be approved tonight,” a spokesman for the Catalan regional government told Reuters, referring to the region’s budget, which includes 1.5 billion euros in spending cuts this year.

Valencia and Catalonia are Spain’s two most indebted regions, both with debt equalling 20 percent of their yearly economic output. Catalonia represents a fifth of the Spanish economy.

(Reporting by Julien Toyer and Nigel Davies. Editing by Jeremy Gaunt.)

LONDON (Reuters) – British insurer Aviva will sell underperforming businesses in a strategic overhaul after irate investors forced out its chief executive last week, it said on Thursday.

Aviva’s new strategy, to be set out in full in July, aims to shore up its capital base against its greater exposure to the troubled euro zone than rivals and to boost a share price which is down over 36 percent in the past year.

Aviva will get rid of those of its 45 units “where the prognosis for the future is not ideal,” said Executive Deputy Chairman John McFarlane, in charge since CEO Andrew Moss became the most prominent victim of a “Shareholder Spring”.

Britain’s second-biggest insurer said it expected to take the rest of the year to find a replacement for Moss, who quit on May 8 and had led the group since 2007.

McFarlane, formerly chief executive of Australia and New Zealand Banking Group, rejected suggestions that his strategic review could pre-empt changes a new chief executive might want to make, deterring some potential candidates.

“As far as you’re concerned, I’m the CEO. What we have to do is improve shareholder value as quickly as we can,” he said, adding that he had been approached by some “very interesting” applicants.

Andy Haste, former CEO of rival insurer RSA and favoured by some investors, does not want the job because McFarlane’s review may limit any turnaround strategy, the Sunday Telegraph reported at the weekend.

McFarlane’s shake-up comes barely 18 months after Aviva began a plan to sell of smaller businesses and cut the number of countries where it operates from 30 to 21.

Aviva, which generated 40 percent of its operating profit in mainland Europe last year, has been hit harder than its main British rivals by the euro zone’s woes.

Aviva shares were down over 1.8 percent at 0925 GMT, lagging a 1 percent fall in the Stoxx 600 European insurance index.

The stock, which has underperformed rivals Prudential and L&G in the last five years, has fallen 8 percent since the start of the year against a 1.4 percent decline for the broader sector.

“With uncertainty over the European landscape and the management situation, we expect Aviva shares will continue to flounder in the very near term,” Espirito Santo analyst Joy Ferneyhough wrote in a note.

Aviva also said its total worldwide sales for the first three months of 2012 fell three percent to 9.7 billion pounds ( billion) because of weaker demand for life insurance in recession-struck Italy and Spain. ( = 0.6282 British pounds)

(Reporting by Myles Neligan; Editing by Matthew Tostevin)