INVESTMENT

Stocks were set to open flat to slightly higher on Tuesday, with sentiment underpinned by data showing a surprise jump in U.S. housing starts and by hopes that banks may be seeing some stabilization.

Luxembourg said on Tuesday it would seek an out-of-court deal to end a protracted legal row about money UBS clients lost to Bernard Madoff that is damaging the country's reputation as a financial center.

Stock index futures signaled a bounce on Tuesday, with sentiment underpinned by hopes that banks may be seeing some stabilization, although there was caution ahead of data that could show the recession taking a further toll on the housing market.

U.S. stock index futures pointed to a flat to higher open on Wall Street on Tuesday, after Alcoa slashed its dividend and issued a plan to raise cash, and ahead of the Federal Reserve's two-day policy-setting meeting.

Goldman Sachs Group Inc is offering to lend money to more than 1,000 staff who have been squeezed by the financial crisis, the New York Times said.

Anticipating restrictions on bonuses, officials at Citigroup Inc and Morgan Stanley are exploring ways to sidestep tough new federal caps on compensation, the Wall Street Journal said.

Asian stocks climbed on Tuesday, with banks extending gains on hopes the struggling global financial system is stabilizing, despite reports showing the U.S. economy is deteriorating further.

U.S. bank stocks, which had their best week on record last week, powered higher amid optimism they can soon return to profitability, only to give back their gains after American Express Co said more credit card customers are missing payments.

JPMorgan Chase & Co must allow shareholders to vote on measures that would tie executive bonuses to the bank's long-term stock performance, U.S. regulators have ruled.

Stocks fell on Monday after American Express Co said the number of people struggling to make credit card payments grew, erasing earlier optimism that banks could return to profit in the downturn.

U.S. bank stocks, which had their best week on record last week, powered higher again on Monday amid optimism that banks are succeeding in efforts to restore profitability, and that a change to accounting rules might alleviate feared capital shortfalls.

Wells Fargo & Co's chairman lambasted the U.S. government for imposing new curbs on lenders that receive federal bailout money, and called the federal plan to subject big banks to stress tests asinine.

Stocks rose for a fifth day in a row on Monday after Barclays joined other major banks in saying it had a strong start for 2009, fueling hopes that the beaten-down sector may be stabilizing.

Citigroup Inc awarded Chief Executive Vikram Pandit $10.82 million of compensation in 2008, a year when the government propped up the bank with $45 billion of capital.

The Dow industrials and the S&P 500 climbed on Monday as Barclays said it had a strong start for 2009, joining other major banks, and added it discussed selling one of its units.

British bank Barclays Plc said it is considering selling iShares, part of its fund management arm, and said it was trading strongly, sending its stock up by more than a fifth.

Bank stocks rose Monday on optimism that efforts to revive economies worldwide will bolster results.

Shares of General Electric Co rose above $10 on Monday for the first time in almost a month after an analyst at UBS lifted a short-term sell rating from the stock.

Stocks on Monday were set to extend their recovery from 12-year lows reached earlier this month after Britain's Barclays became the latest bank to buoy hopes that some stabilization may be returning in banking.

British bank Barclays Plc on Monday confirmed it had discussed selling its iShares unit and said it was trading strongly, sending its shares up by more than a fifth.

Stock futures rose on Monday, putting Wall Street on course to extend its recovery from 12-year lows reached earlier this month, after Britain's Barclays became the latest bank to buoy hopes that some stabilization may be returning in banking.