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* Asia revenue rising, helped by retail business* Non-accrual loan portfolio shrinks* Shares down 1 percent in afternoon tradingBy Joe RauchOct 17 (Reuters) - Citigroup Inc reported higher quarterly earnings, helped by an accounting gain, but warned that developed markets could face weak growth for years, and the bank’s shares fell.Stripping out the accounting gain, third-quarter earnings were better than expected, and Citi’s stock rallied initially. But shares later weakened after senior bank executives sounded cautious notes on the economy and lending margins.Like its rivals, Citigroup was hit by the European debt crisis and the sluggish U.S. economy. Investment banking fees dropped and its loan book fell 2 percent. Operating expenses rose, in part because of investments made to boost its business.Chief Executive Vikram Pandit is trying to turn the bank around after the financial crisis by focusing on emerging markets, where economies are still growing relatively quickly. The weak U.S. economy also weighed on results at JPMorgan Chase & CoWells Fargo & Co .”In the developed markets, growth is likely to be slow for years,” Pandit said in a conference call with analysts.He also said the U.S. housing market remains the “greatest risk” that domestic banks face.Chief Financial Officer John Gerspach said the bank’s net interest margin is expected to decline by “a couple of basis points” in upcoming quarters, absent a significant portfolio sale.Overseas growth has helped Citigroup in recent quarters, but there are early signs of difficulties in its emerging markets business. For example, retail loan volume in Latin America dropped 7 percent in the third quarter from the second quarter.Citigroup, the third-largest U.S. bank by assets, reported net income of $3.77 billion, or $1.23 per share, up from $2.17 billion, or 72 cents per share, a year earlier.The latest results included a pretax gain of $1.9 billion, or 39 cents per share after taxes, due to the bank’s widening credit spreads during the quarter. When a bank’s debt weakens relative to U.S. Treasuries, it can record an accounting gain because it could profit from buying back debt.Excluding that gain, Citi earned $2.6 billion, or 84 cents per share. Analysts’ average forecast was 81 cents per share, according to Thomson Reuters I/B/E/S.In afternoon trading, Citi shares were down 29 cents, or 1 percent, to $28.11. They rose as high as $29.48 in morning dealings.INVESTMENT BANKING HITLike JPMorgan, Citigroup’s investment banking business was hurt when European market turmoil made companies reluctant to buy competitors or issue securities.Revenue at Citi’s continuing securities and banking business fell 12 percent excluding the debt value adjustment, to $4.84 billion.Overall operating expenses rose 8 percent from a year earlier. Operating expenses were $12.46 billion and have been hovering around that level since the fourth quarter of 2010. From the beginning of 2009 through the third quarter of 2010, quarterly operating expenses were typically closer to $11.9 billion.Citi, which received three U.S. government rescues at the height of the financial crisis, is seeing its problem loan portfolio shrink.Nonaccrual loans fell to $7.95 billion in the third quarter from $12.46 billion a year earlier.The bank’s share price has fallen about 40 percent this year, in line with declines for other large banks.

* FSB to be strengthened up to ensure new rules enforced* Names of surcharged banks may be published at November summit* G20 stops short of mandatory commodities position limits* Germany says no chance of global financial transaction taxBy Francesca Landini and Huw JonesPARIS/LONDON, Oct 15 (Reuters) - Finance ministers and central bankers from the world’s top economies backed on Saturday a mandatory capital surcharge on big lenders of up to 2.5 percent to be phased in from 2016, dealing a blow to banks hoping for a rethink or delay.The communique from a meeting of G20 finance chiefs endorsed a 1-2.5 percent capital surcharge on top banks like Goldman Sachs , HSBC , Deutsche Bank and JPMorgan Chase .The aim is to make sure they have enough capital to withstand market turbulence so that taxpayers won’t have to rescue banks again in the next crisis.A summit of the G20 leaders in Cannes, France in early November is set to give final approval to the surcharge plan and name the banks affected, known as global systemically important financial institution or G-SIFIs, G20 sources said.”Now that the framework applicable to G-SIFIs is agreed, we urge the Financial Stability Board to define the modalities to extend expeditiously the framework to all SIFIs,” the communique said.JPMorgan Chase Chief Executive Jamie Dimon has called the surcharge anti-American while insurers are battling against being saddled with one too, as are second tier banks.The charge — which will be in addition to a “Basel III” 7 percent minimum core capital buffer being phased in for all banks from 2013 — is part of a wider package the G20 ministers endorsed on Saturday.They also reaffirmed the timeline for Basel III in another blow to banks wanting a delay, saying they will crimp lending.Banks will welcome confirmation from Germany’s finance minister there is no chance of a global tax on financial transactions, though he urged Europe to push ahead with its own, a step Britain opposes.Other elements backed on Saturday included common “tools” for supervisors to wind up ailing banks, compulsory “living wills” or resolution plans for every big bank, and more intensive supervision for large lenders.The FSB, which formulates and coordinates financial regulation on behalf of the G20, has already drawn up criteria to determine which banks face a surcharge.It has said 28 banks would be affected if the regime was introduced immediately but G20 sources said the Cannes summit may name up to 50 lenders. Canadian Finance Minister Jim Flaherty said there was no official list yet and he did not expect any Canadian banks to be on it.FSB Chairman Mario Draghi steps down as chairman this month to become president of the European Central Bank. Asked if he was the lead candidate to replace him, Bank of Canada Governor Mark Carney told reporters: “I hope so.”COMMODITIESThe FSB won G20 backing for its workplan to define the so-called shadow banking sector before thrashing out recommendations next year to regulate it.Supervisors fear that as banks face tougher rules, risky activities could migrate to other parts of the financial system such as money market funds and special vehicles.G20 presidency France lost its battle to introduce tough curbs on what it sees as speculation in food and energy commodity markets by imposing limits on the size of positions a trader can hold at any given time.G20 ministers said recommendations from the International Organisation of Securities Commissions (IOSCO), which groups national market watchdogs, on more transparency in commodity derivatives markets should be implemented by the end of 2012.The IOSCO report falls short of mandating commodity position limits in the way the U.S. Commodity Futures Trading Commission is expected to do next week.Ministers also asked IOSCO to make recommendations to “improve the functioning and oversight of price reporting agencies for mid-2012”.They also want to make it easier to track traders.”We underscored our support for a global legal entity identifier system which uniquely identifies parties to financial transactions with an appropriate governance structure representing public interest,” their communique said.IMPLEMENTATIONThe Paris communique marked a turning point as the G20 begins to shift its focus from rulemaking to implementation of the welter of rules it set in train.Its main tool will be a beefed up FSB.”To ensure that the FSB keeps pace with our ambitious financial regulation agenda, we commit to strengthen its capacity, resources and governance building on its Chair’s preliminary proposals and call for first steps to be implemented by the end of this year, the communique said.The ministers agreed to coordinate monitoring of Basel III, set up peer reviews of how the capital surcharge is introduced, and better coordinate their derivatives reforms which threaten to miss the end of 2012 deadline.Draghi proposed more members from emerging markets and developing countries on the FSB’s agenda-setting steering committee, G20 sources said.He also wants representatives of finance ministries on the FSB steering committee to add political clout, sources said.G20 ministers backed an FSB report on financial consumer protection principles authored by the OECD but called for further work on “implementation issues”.

* JP Morgan ups price target to $705 from $685* Shares up nearly 6 pctBy Alexei OreskovicSAN FRANCISCO, Oct 14 (Reuters) - Google Inc’s free Android smartphone software, already a big hit with consumers, is starting to win the hearts of investors.The world’s No. 1 Internet search company offered a peek at its mobile business during quarterly results on Thursday, revealing that the business was generating revenue at an annual run rate of $2.5 billion, up from $1 billion last year.That helped Google sail past third-quarter financial targets set by analysts, sending its shares up nearly 6 percent to $591.68 on Friday and easing some of Wall Street’s concerns that mobile returns might not justify the investment.”People just haven’t given them any credit for that division. I think it could be a huge part of the overall company,” said Pat Adams, portfolio manager at the Dunham Loss Averse Growth Fund, which owns Google shares.”There are so many more mobile devices out there than there are PCs,” Adams said. “What they did was brilliant to give that operating system away to get the search part of it,” he added.Google lets phone makers such as Samsung Electronics , LG Electronics and HTC Corp use its Android software for free, banking on consumers using those phones to visit Google’s advertising-supported website to search for information.The booming popularity of smartphones has frustrated many of the established giants of the computer industry, from Microsoft Corp to Hewlett-Packard Co .For Google, whose business is built upon people using its search engine, making the transition from the personal computers to mobile devices is crucial.The company has stepped up investments in its mobile business, which competes with iPhone-maker Apple Inc . Google’s Android mobile software — already the world’s most-used smartphone platform — powers 190 million devices, up from 135 million in mid-July.The explosion of Android devices, as well as the availability of Google search on Apple’s iPhones, has made Google even more dominant in mobile search than on the desktop PC, according to JP Morgan analyst Doug Anmuth who pegged Google’s mobile search market share at 90 percent.That strong position accounts for the sharp, 28 percent uptick in paid clicks on search ads that Google experienced during the third quarter, Anmuth said in a note to investors.Those ads appear to command lower rates than PC search ads, analysts noted. But some analysts said they expect that to change over time, especially as Google creates new forms of advertising that take advantage of a user’s location.Mobile advertising sales is but one component of what analysts believe could be a broader wireless opportunity for Google. The company has begun offering coupon deals, and could make money through retailer loyalty programs and its recently launched Google Wallet, a free service which allows shoppers to use their mobile phones to pay for purchases.MOTOROLA BETMore concerning for some investors is Google’s plan to acquire mobile phone maker Motorola Mobility Holdings for $12.5 billion.The deal will give Google access to one of the largest patent libraries in the wireless industry, as well as hardware manufacturing operations that will allow it to develop its own line of smartphones.But some worry that Google is entering a low-margin hardware business in which it has no experience, and that the move could jeopardize its relationships with other phone makers that use Android.BGC Partners analyst Colin Gillis said he did not think Google’s increase in mobile ad revenue would make investors feel any better about the Motorola deal, which is expected to close this year or early in 2012.”You could argue the Motorola deal puts some of that revenue at risk,” he said, noting that some current Android phone makers might see Google as a competitor once it acquires Motorola and reduce their support for Google products. Google has said it plans to operate Motorola as a separate business.Gillis also noted that the $2.5 billion annual run rate in Google’s mobile business, while impressive, remains less than 10 percent of the company’s overall revenue.And he added that Google may not necessarily have based the $2.5 billion run rate on one quarter’s worth of revenue, which would have suggested that Google made $625 million in mobile revenue in the third quarter.”They probably took the last month and multiplied it by 12. It could be the last day,” he noted. “We have no idea what that number really is.”Whatever the number though, Google’s mobile revenue is clearly growing quickly, and for many on Wall Street, that’s good enough for now. Many brokerages raised their price targets on Google on Friday, some by as much as 10 percent.”We think mobile is near a massive volume inflection point,” wrote Susquehanna Financial Group analyst Herman Leung in a note to investors on Friday.”At these growth rates, we think mobile revenue could be larger than display (advertising revenue) by 2012.”

Sources told Reuters on Thursday that under certain stress-testing scenarios, Deutsche could need up to 9 billion euros ($12.51 billion) in extra capital.Goldman Sachs said on Friday that as many as 50 European banks could fail those stress tests, prompting capital shortfalls of 139 billion euros. But Ackermann told CNBC that simply forcing banks to raise new money was not the answer.”Sovereign risk has to be made risk-free again,” he said.Ackermann said, as he has in past, that Greek debt needed to be restructured and that other euro zone countries like Ireland and Portugal needed to be supported in their own deficit-reduction efforts.

Signature Metals produces gold at its flagship mine at the Konongo gold project in Ghana, West Africa. ($1 = 1.281 Singapore Dollars)

NeuStar, which routes phone calls and text messages in North America, expects the deal to add at least 20 cents a share to its 2012 earnings and push annual revenue to about $750 million.Vienna, Virginia-based Targus — which helps identify, verify and locate callers, and maintains a database — generated about $149 million in revenue for the twelve months ended September 30.NeuStar, which was spun off from Lockheed Martin Corp (LMT.N) in 1999, also maintains databases that directs communication via phones and the Internet.”We permit the phone calls to be sent and they (Targus) enable the people who are picking up the phone to know who is calling them,” NeuStar CEO Lisa Hook told Reuters in an interview.Hook said the companies have some customer overlap in the cable, wireless carrier and advertising industries.When NeuStar began talking to Targus in November 2010, the target company was not pursuing a sale, Hook said.Last year, Targus had hired Wells Fargo to conduct a sale process. But it was discontinued and the company decided to pursue recapitalization.NeuStar expects to fund the deal with a combination of cash on hand and $600 million in committed financing.Morgan Stanley and Allen & Co were NeuStar’s financial advisers, while Wells Fargo advised Targus.Separately, NeuStar reported third-quarter earnings of 51 cents a share that beat analysts’ expectations by 7 cents and guided higher earnings for the year.Revenue rose 18 percent to $152.5 million.The company also said it plans to buy back another $250 million of its Class A common shares on an accelerated basis.Shares of the company, which closed at $28.04 on Tuesday on the New York Stock Exchange, were up 3 percent in after market trade at $29.03.