(Reuters) – Greeks are voting with their wallets and pulling euros out of the banks in fear that their country may leave the European single currency despite the declared determination of EU powers Germany and France to keep Athens in the monetary union.

As financial markets shuddered over the deepening turmoil in Athens on Wednesday, a chorus of skeptical politicians and central bankers from London to Ottawa predicted the euro zone could fall apart soon unless European governments act more decisively to save the currency.

“It either has to make up or it is looking at a potential break-up,” British Prime Minister David Cameron told parliament in London. “That is the choice they have to make, and it is a choice they cannot long put off.

Greek President Karolos Papoulias warned political leaders that citizens were withdrawing their money due to “great fear that could develop into panic” at the risk of a debt default and exit from the euro area, according to minutes of their meetings posted on the presidency’s website.

The president, who tried in vain to broker a national unity government, appointed a senior judge, Panagiotis Pikrammenos, as caretaker prime minister on Wednesday until a second general election in just over a month is held on June 17.

The failure of Papoulias’ talks to avert a repeat election sent judders around financial markets, hitting global share prices and other riskier assets.

Investors fled to the U.S. dollar and safe-haven German bonds while the euro lost almost a cent to fall to a four-month low below $1.27. Spanish and Italian bond yields spiked while a key index of European shares fell to its lowest level this year.

German Chancellor Angela Merkel and new French President Francois Hollande sought to quell talk of a possible Greek departure from the euro zone after their first meeting on Tuesday evening, which focused on ways out of the 17-nation currency area’s debt crisis.

“We agreed that we want Greece to stay in the euro,” Merkel told a joint news conference in Berlin, adding that Athens must respect the conditions set in a second international bailout agreement signed in March.

CONSEQUENCES

Nearly two thirds of Greeks voted on May 6 for parties of the radical left and far right which oppose the terms of the EU/IMF assistance program, which has imposed steep wage and pension cuts, deepening a four-year recession.

Policymakers from European Union states and the European Central Bank have warned they would stop sending Athens the cash it needs to stay afloat if a new government tears up the plan.

European Commission chief Jose Manuel Barroso said the Greek people must now make a fully informed decision understanding the consequences for their country’s future.

“The ultimate resolve to stay in the euro area must come from Greece itself,” Barroso told a news conference.

But many Greek voters believe they can stay in the euro without abiding by the conditions imposed to obtain the bailouts, as promised by Alexis Tsipras, the charismatic 37-year-old leader of the surging leftist SYRIZA party.

A second opinion poll showed that SYRIZA, which opposes the austerity conditions attached to the assistance program, is consolidating gains and is on track to become the biggest group in parliament in a re-run vote, pulling ahead of mainstream pro-bailout centre-left and centre-right parties.

The determination to keep Greece in the euro spelled out by Merkel and Hollande may be undermined by sniping from several EU finance ministers, including Germany’s own Wolfgang Schaeuble, who have publicly envisaged a possible Greek exit.

Merkel’s office complained to Austria after Finance Minister Maria Fekter suggested this week that Greece could be thrown out of the EU as a result of its economic crisis, the newspaper Oesterreich reported.

ALARM

International Monetary Fund chief Christine Lagarde said on Tuesday that Greece would either have to be given more time and money to meet its debt reduction targets or else euro zone countries would have to begin planning for its exit.

Spanish Prime Minister Mariano Rajoy voiced the alarm of a country that could be next in the firing line if Greece left.

“I don’t want Greece to exit the euro,” he told parliament in Madrid, as Spain’s risk premium over benchmark German 10-year bonds rose to more than 5 percentage points, a euro era high.

“I believe it would be a major error, it would be bad news and I believe we have to guarantee the sustainability of public debt and then all of us comply with our commitments, which is what we are doing in Spain, what Italy is trying to do and what all the other countries are also trying to do.”

In a blow to Rajoy’s efforts to clean up Spain’s debt-laden financial sector, shares in recently nationalized lender Bankia tumbled 10 percent on Wednesday after it delayed first quarter results, raising fears that the government will have to inject more cash.

Bankia lies at the core of concerns about Spanish banks’ problems after a 2008 property crash. Many analysts believe Madrid or the EU will have to inject funds to avert a collapse of the financial system, worsening the euro zone debt crisis.

Italian Prime Minister Mario Monti, whose heavily indebted country is also in markets’ sights despite economic reforms praised by the IMF, said that U.S. President Barack Obama was seriously concerned about the euro zone situation, which will be on the agenda of a G8 summit in Camp David at the weekend.

Obama spoke to Monti on Tuesday and the White House said they agreed on the need to intensify efforts to revive economic growth and job creation in Europe, apparently siding with Hollande in his drive to temper German-led austerity policies.

Among the skeptical chorus, Canadian Finance Minister Jim Flaherty, a frequent scourge of the euro zone, said this week that Europeans should abandon the single currency if they were not willing to do more to assist member states in trouble.

“They have to do the right thing, use some of their taxpayers’ money to bail out some of the weaker members of the euro zone – or start moving away from the euro zone and just say this was an experiment that has not worked,” he told CTV television.

Bank of England governor Mervyn King told a news conference in London that the euro zone, which Britain refused to join, was “tearing itself apart without any obvious solution”.

“Whatever happens, there are major problems ahead, there are credit losses to be realized and however they choose a solution here, it is going to be a very difficult path to go through because countries like Germany and the Netherlands have yet to face up to their rebalancing,” King said.

(Additional reporting by Dina Kyriakidou and Ingrid Melander in Athens, Emma Pinedo and Fiona Ortiz in Madrid, Robert-Jan Bartunek and Robin Emmott in Brussels,; Writing by Paul Taylor, editing by Janet McBride)

(Reuters) – Facebook Inc increased the size of its initial public offering by almost 25 percent, and could raise as much as $16 billion as strong investor demand for a share of the No.1 social network trumps debate about its long-term potential to make money.

Facebook, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, said on Wednesday it will add about 84 million shares to its IPO, floating about 421 million shares in an offering expected to be priced on Thursday.

The additional shares will be sold by early investors including PayPal co-founder Peter Thiel, Accel Partners’ James Breyer and investment manager Tiger Global Management, the company said in a filing.

The company itself has not increased the number of shares it will sell.

Zuckerberg’s voting power will be reduced to about 55.8 percent from about 57.3 percent after the IPO as a result of the issue of additional shares, the company said.

The expanded size, coupled with Facebook’s recently announced plans to raise the IPO price range, would make Facebook the third-largest initial share sale in U.S. history after Visa Inc and General Motors.

The social networking company is drumming up massive demand for the offering even as slowing revenue and user growth spur questions about the long-term Facebook story.

Those concerns over revenue growth were underscored on Tuesday, when GM said it planned to pull out of advertising on Facebook.

“This is much more a spectacle, a media event and a cultural moment than it is an IPO,” said Max Wolff, an analyst at GreenCrest Capital. “This is not a game of models and fundamentals at this point.”

GM’s announcement, while ill-timed for Facebook, should not seriously hurt the IPO’s reception for now as it may not be representative of advertisers’ overall attitude, said Brian Wieser, an analyst with Pivotal Research Group.

“The demand for the IPO probably won’t be affected materially by this,” he said, adding, however, there were probably a lot of calls between underwriters and investors following GM’s announcement.

The IPO, Silicon Valley’s largest, eclipses the roughly $2 billion debut by Google Inc in 2004.

Facebook raised the target price range to $34-$38 per share in response to strong demand, from $28-$35, according to a Tuesday filing. That would value the company at $93-$104 billion, rivaling the market value of Internet powerhouses such as Amazon.com Inc, and exceeding that of Hewlett-Packard Co and Dell Inc combined.

The increased price range made it very unlikely that Facebook shares would double on their trading debut as they might have if the company had come out at the low end of its initial price range, Wolff said. He expects a first-day gain of about 10 percent.

“No rational person thought they were buying the stock for $28,” said Wedbush Securities analyst Michael Patcher, noting Facebook had traded as high as $44 in the secondary markets in recent months.

Facebook said in Tuesday’s filing that it arrived at the higher IPO price range after one week of marketing the offering – part of a cross-country roadshow in which CEO Zuckerberg has taken the stage to lay out his vision for the company’s money-making potential and its top priorities.

The price range hike, coupled with strong results from internet and social media players Groupon Inc and China’s Renren Inc, contributed to a dotcom rally on Wall Street on Tuesday. Shares of Pandora Media Inc rose 10.3 percent, Zynga Inc was up 7.7 percent, Groupon climbed 3.7 percent and Renren gained 6.4 percent.

LONG-TERM GROWTH

Before the IPO size was increased, Facebook would have raised about $12.1 billion based on the midpoint price of $36 and the 337.4 million shares on offer originally.

At this midpoint, Facebook would be valued at roughly 27 times its 2011 revenue, or 99 times earnings. Google went public at a valuation of $23 billion, or 16 times its trailing revenue and 218 times earnings. Apple Inc went public in 1980 at a valuation of 25 times its revenue and 102 times earnings.

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

With some 900 million users, it had $1 billion in net income on revenue of $3.7 billion in 2011.

The company has also extended the time frame for its $1 billion acquisition of mobile app maker Instagram, projecting the deal would close this year instead of the second quarter as it previously indicated.

It provided no reasons, though a source familiar with the matter told Reuters last week that the U.S. Federal Trade Commission has reached out to Google and Twitter as part of the agency’s standard review for deals of that size.

Facebook is scheduled to begin trading on the Nasdaq on Friday. A host of Wall Street banks are underwriting the offering, with Morgan Stanley, JPMorgan and Goldman Sachs serving as leads.

(Additional reporting by Tanya Agrawal; Editing by Edwin Chan, Maureen Bavdek, Matthew Lewis, Richard Chang, Ryan Woo and Ian Geoghegan and Saumyadeb Chakrabarty)

(Reuters) – Apple Inc plans to use a larger screen on the next-generation iPhone and has begun to place orders for the new displays from suppliers in South Korea and Japan, people familiar with the situation said on Wednesday.

The new iPhone screens will measure 4 inches from corner to corner, one source said. That would represent a roughly 30 percent increase in viewing area, assuming Apple kept other dimensions proportional. Apple has used a 3.5-inch screen since introducing the iPhone in 2007.

Early production of the new screens has begun at three suppliers: Korea’s LG Display Co Ltd, Sharp Corp and Japan Display Inc, a Japanese government-brokered merger combining the screen production of three companies.

It is likely all three of the screen suppliers will get production orders from Apple, which could begin as soon as June. That would allow the new iPhone to go into production as soon as August, if the company follows its own precedent in moving from orders for prototypes for key components to launch.

Apple’s decision to equip the next iPhone with a larger screen represents part of a competitive response to Samsung Electronics Co Ltd.

Samsung unveiled its top-of-the line Galaxy smartphone with a 4.8-inch touch-screen and a faster processor earlier this month.

Samsung, which this year became the world’s largest cell phone maker, sold 45 million smartphones in the first quarter, and sales of the Galaxy phones outstripped the iPhone.

Apple was not immediately available to comment.

Apple’s move toward a larger display for the next generation iPhone was earlier reported by the Wall Street Journal.

In addition to being Apple’s rival, Samsung is also a major components supplier to the U.S. computer, tablet and phone manufacturer.

The share of the production of new screens that go to each of the three manufacturers working with Apple has not been determined, one source said.

Sales of the touch-screen iPhone now account for about one-half of Apple’s total sales, and the phone has been a key source of growth for the company in Asia.

A report in March by a South Korea business newspaper said Apple would use a “retina” display on the next iPhone, the same technology in its latest iPad that enhance image quality.

The latest iPhone 4S was introduced in October last year.

(Reporting By Reiji Murai and Mari Saito; editing by Kevin Krolicki, Ron Popeski and Jeffrey Benkoe)

(Reuters) – Shareholders of JPMorgan Chase & Co gathered in the hundreds on Tuesday for its annual meeting, as pressure rises on the bank and Chief Executive Jamie Dimon over billions of dollars in trading losses.

Even as the meeting kicked off, some shareholders were already calling for Dimon to claw back compensation from the executives responsible for the losses. Meanwhile, current and former government officials piled on what they called the bank’s failure to manage its risks.

The meeting, at a bank back-office complex in Tampa, Florida, will give investors their first crack at Dimon, who is also JPMorgan’s chairman, since he revealed a soured hedging strategy had resulted in trading losses of at least $2 billion.

Nearly two hours before the meeting began, the company appeared to have a heavy turnout on its hands, with half of the 300-plus seats already filled and the potential for many more people to come. Security guards started taking shareholders’ coffee cups and water bottles as the start of the meeting drew near.

U.S. Treasury Secretary Timothy Geithner said JPMorgan’s losses strengthened the case for reform.

“I think this failure of risk management is just a very powerful case for … financial reform,” Geithner told an event in Washington sponsored by the Peterson Foundation. “The test of reform is not whether you can prevent banks from making mistakes … the test of reform should be: Do those mistakes put at risk the broader economy, the financial system or the taxpayer?”

After two trading days of heavy losses, JPMorgan shares rose 1.9 percent to $36.48 in early trading. Even so, the stock is still down more than 10 percent since the trading losses were disclosed, wiping out $16.2 billion in market capitalization.

“It affects my opinion of the entire financial industry,” said Dennis Hong, principal with Altimeter Capital, a hedge fund that manages about $250 million.

“It’s really shocking because JPMorgan has been known as the most conservative in terms of managing their business risk. They may be losing their way,” Hong said at an event in Boston.

CLAWBACK PRESSURE

JPMorgan is likely to face a barrage of questions about what Dimon knew, when he knew it, and how a bank that has boasted of its “fortress” balance sheet could make such a major mistake.

The shakeup from those trades started Monday, as the company’s chief investment officer retired.

“I am amazed that they think $2 billion is a bump in the road,” said A. Reihl, an 85-year-old shareholder who said she has owned the stock for more than a decade. “This is not the time to be taking risk.”

New York City Comptroller John Liu, who oversees the city’s $400 million stake in JPMorgan, on Tuesday joined those calling for a “clawback” of compensation from executives responsible for the trading losses, including the retired CIO, Ina Drew.

In its 2011 annual report, JPMorgan said its stock-based compensation awards were subject to such clawback provisions. It said in its proxy filing that it could conduct a clawback review “as a result of a material restatement of earnings or by acts or omissions of employees.”

JPMorgan can cancel unvested awards or require the value of distributed shares to be repaid when “the employee engages in conduct that causes material financial or reputational harm to the Firm or its business activities,” according to the proxy.

Reuters was unable to reach Drew at her New Jersey home on Monday evening.

“We don’t know the facts and culpability, but it appears she did have a responsibility here along with a number of others,” Sheila Bair, former chairman of the Federal Deposit Insurance Corp, said in an interview with Reuters Insider. “Clearly, the whole purpose of clawbacks is if you make a bad bet that results in losses, compensation should be clawed back.”

NOISY MEETING

At the meeting proper, shareholders will vote on proposals including splitting the roles of chairman and CEO.

The California Public Employees’ Retirement System, the largest pension fund in the United States, will lead calls to strip Dimon of the chairmanship. It said splitting the offices of chairman and CEO would lead to better risk controls.

“CalPERS believes if the chairman was independent the board may be able to exercise stronger oversight of management,” the organization said in a note setting out its voting intentions ahead of the meeting.

The group, which owns $565 million of JPMorgan stock, said it would support executive compensation proposals but warned it would “closely review” the effects of the trading losses when analyzing the 2013 say-on-pay vote.

The two leading proxy advisory firms — ISS and Glass, Lewis — are already backing the nonbinding proposal calling for a split of the jobs of chairman and CEO.

The California State Teachers Retirement System, the Florida State Board of Administration and the New York State Comptroller’s office, which each oversee about $150 billion in assets, have said they will also vote for the split.

‘F’ ON CORPORATE GOVERNANCE

No matter the circumstances, governance experts expect some fireworks on Tuesday.

“It was going to be a noisy shareholder meeting anyway, but it’s likely to be more boisterous than if it had been held before last Thursday,” said Paul Hodgson, senior research associate of GMI Ratings.

The firm slapped its lowest rating – “F” – on JPMorgan’s corporate governance policies even before disclosure of the trading loss. Fewer than 5 percent of the companies rated by GMI get the bottom ranking, Hodgson said.

Many large shareholders wait until the last few days to vote, so the trading loss may influence some to withhold votes supporting management proposals or to actively support some shareholder resolutions.

“We’re not looking at losses in a portfolio that could continue deteriorating because of systemic issues,” said Guggenheim Securities analyst Marty Mosby. “We’re dealing with a hedging strategy that didn’t work.”

(Reporting by David Henry in Tampa, Ross Kerber and Jim Finkle in Boston, Jed Horowitz, David Randall, Dan Wilchins and Rhonda Schaffler in New York and Sinead Cruise in London; Writing by Ben Berkowitz; Editing by Alwyn Scott and David Holmes)

(Reuters) – Groupon Inc (GRPN.O) shares jumped as much as 27 percent in early trading after the daily deals company posted its first-ever quarterly profit, allaying fears of slowing growth.

The company said on Monday that North America revenue rose 33 percent for the first quarter — its strongest growth in a year. Investors have been concerned that growth was slowing in the relatively more mature North American business.

“While billings, revenue, margins, and guidance all met or exceeded, signs of accelerated North American revenue shows that the company’s technology efforts around personalization and, to a lesser extent, mobile and rewards, are paying off,” Evercore Partners analyst Ken Sena wrote in a note.

Sena raised his price target on the stock to $17 from $15 and kept a “buy” rating.

New technology, mainly SmartDeals, is driving the strong domestic performance and this bodes well for international markets, which have yet to receive the technology upgrade, Benchmark analyst Clayton Moran said.

Groupon’s SmartDeals initiative aims to make its daily deals more relevant to subscribers by matching them to specific deals.

Citigroup analyst Mark Mahaney raised his rating on Groupon stock to “buy” from “neutral,” saying the company’s success in terms of revenue and free cash flow was “extremely impressive.”

The company, whose valuation has halved this year on concern of waning demand for its daily deals and persistent accounting problems, said it now had 36.9 million active customers and served more than 100,000 unique merchants in the first quarter — crossing that threshold for the first time.

“Groupon appears to be gaining market share in general,” analyst Moran said.

Groupon’s take rate — which measures how much of the money it keeps after sharing cash with merchants running its deals — rose to 41.3 percent from 40 percent in the previous quarter.

Also, Groupon’s move to appoint Robert Bass, a Deloitte LLP vice chairman, and Daniel Henry, chief financial officer of the American Express Co (AXP.N), addresses its accounting issues, Citigroup analyst Mark Mahaney said.

The world’s largest daily deals company came under renewed fire in March after revising its fourth-quarter financial results and admitting to a “material weakness” in its financial statements, months after its high-profile IPO.

However, Citigroup said Groupon’s overall marketing spend per net new active customer rose to $38 in the first quarter from $32 in the fourth quarter, indicating a significant slowdown in net customer adds relative to marketing spend.

The brokerage lowered its price target to $22 from $24.

Benchmark’s Moran also cut his price target on the stock to $20 from $28.

The Chicago-based company’s shares were trading up $2.06 to 13.80 on Tuesday on the Nasdaq. The stock has been a poor investment for buyers since Groupon went public in November 2011, when the IPO was priced at $20 a share.

(Reporting by Supantha Mukherjee in Bangalore; Editing by Joyjeet Das)

(Technology Review Magazine) – Conversations between people include a lot more than just words. All sorts of visual and aural cues indicate each party’s state of mind and make for a productive interaction.

But a furrowed brow, a gesticulating hand, and a beaming smile are all lost on computers. Now, researchers at MIT and Tufts are experimenting with a way for computers to gain a little insight into our inner world.

Their system, called Brainput, is designed to recognize when a person’s workload is excessive and then automatically modify a computer interface to make it easier. The researchers used a lightweight, portable brain monitoring technology, called functional near-infrared spectroscopy (fNIRS), that determines when a person is multitasking. Analysis of the brain scan data was then fed into a system that adjusted the user’s workload at those times. A computing system with Brainput could, in other words, learn to give you a break.

There are other ways that a computer could detect when a person’s mental workload is becoming overwhelming. It could, for example, log errors in typing or speed of keystrokes. It could also use computer vision to detect facial expressions. “Brainput tries to get to closer to the source, by looking directly at brain activity,” says Erin Treacy Solovey, a postdoctoral researcher at MIT. She presented the results last Wednesday at the Computer Human Interaction Conference in Austin, Texas.

For an experiment, Treacy Solovey and her team incorporated Brainput into virtual robots designed to adapt to the mental state of their human controller. The main goal was for each operator, capped with fNIRS headgear, to guide two different robots through a maze to find a location where a Wi-Fi signal was strong enough to send a message. But here’s what made it tough: the drivers had to constantly switch between the two robots, trying to keep track of both their locations and keep them from crashing into walls.

As the research subjects drove their robots toward the strongest Wi-Fi signal, their fNIRS sensors transmitted information about their mental state to the robots. The robots, for their part, were programmed to focus on a state of mind called branching, in which a person is simultaneously working on two goals that require attention. (Previous studies have correlated certain fNIRS signals to this sort of mental state.) When the robots sensed that the driver was branching, they took on more of the navigation themselves.

The researchers found that when the robots’ autonomous mode kicked in, the overall performance of the human-robot team improved. The drivers didn’t seem to notice or get frustrated by the autonomous behavior of the robot when they were multitasking.

“A good chunk of computer and human-computing interaction research these days is focused on giving computers better senses so they can either implicitly or explicitly augment our intellect and assist with our tasks,” says Desney Tan, a researcher at Microsoft Research. “This work is a wonderful first step toward understanding our changing mental state and designing interfaces that dynamically tailor themselves so that the human-computer system can be as effective as possible.”

Treacy Solovey suggests that such a system could potentially be used to help drivers, pilots, and supervisors of unmanned aerial vehicles. She says future work will investigate other cognitive states that can be reliably measured using fNIRS.

BY KATE GREENE

(Reuters) – JPMorgan Chase & Co sacrificed investment chief Ina Drew on Monday in response to trading losses that could reach $3 billion or more and which have tainted the reputation of the bank’s high profile chief executive Jamie Dimon.

The biggest bank in the United States by assets said Drew, its New York-based chief investment officer and one of its highest-paid executives, would retire. The statement confirmed what sources close to the matter had previously told Reuters, that Drew would depart the firm.

It also said Matt Zames would take Drew’s position, while Daniel Pinto, currently co-head of global fixed income with Zames, would become sole head of the group.

Mike Cavanagh, CEO of the Treasury & Securities Services (TSS) group, will lead a team of executives overseeing and co-ordinating the group’s response to the recent losses.

The statement made no mention of two of Drew’s subordinates who were involved with the costly derivatives trades, London-based Achilles Macris and Javier Martin-Artajo, who the sources had also said were expected to leave.

Neither could be reached for comment earlier on Monday. A woman who answered the door at Macris’s London apartment in a grandiose 19th century mansion block overlooking Westminster Cathedral said he was at work.

JPMorgan said Cavanagh “will ensure that best practices and lessons learned are carried across the firm.”

The departure of Drew after 30 years at JPMorgan comes after the unit she ran, known as the Chief Investment Office (CIO), mismanaged a portfolio of derivatives tied to the creditworthiness of bonds, according to bank executives.

The portfolio included layers of instruments used in hedging that became too complicated to work and too big to quickly unwind in the esoteric, thinly traded market.

One hedge fund manager who previously ran a proprietary (or prop) trading book at JPMorgan said the bank’s public commitments to trim balance sheet risk were at odds with its network of trading silos, who were making bets independently with only a handful of the bank’s most senior executives notified of their vast, complex exposures.

“This (CIO) group was completely separate, completely distinct from the prop trading unit. We had no clue about their prop book and they would have no clue about ours for that matter,” the manager said.

“They were all totally independent. All the activities were reported to New York and they ran the allocation of capital to each and every strategy … those decisions were definitely not taken in London. These things were very, very opaque. Every bank is, whether you’re Goldman, Morgan (Stanley) or JP.”

PAST PERFORMANCE

Drew had repeatedly offered to resign in recent weeks after the magnitude of the debacle became clear, according to one of the sources, but the resignation was not immediately accepted because of her past performance at the bank.

Until the loss was disclosed late on Thursday, Drew was considered by some market participants as one of the best managers of balance sheet risks. She earned more than $15 million in each of the last two years.

“Ina is an amazing investor,” said a money manager who knows Drew, but who declined to be quoted by name. “She’s done a really good job over a lot of years. But they only remember your last trade.”

Departures had been on the cards in the wake of the trading losses, though in disclosing the losses on Thursday, CEO Jamie Dimon said only that the bank was continuing to investigate and would take disciplinary action with those involved.

Dimon said the bank’s losses could reach $3 billion or more as it unwinds the positions in coming months.

The losses have marred JPMorgan’s reputation for risk management, prompted a downgrade in its credit ratings and thrown an unflattering spotlight on Dimon, a critic of increased regulation who had become one of America’s best-known bankers.

On Sunday, Dimon’s reputation was tarnished when the New York Times reported remarks he made recently at a dinner party in Dallas. Dimon called arguments about too-big-to-fail banks – arguments made by former Federal Reserve chief Paul Volcker and Richard Fisher, president of the Federal Reserve Bank of Dallas – “infantile” and “nonfactual,” according to the Times.

STOP THE CYCLE

Dimon is himself a board member of the Federal Reserve Bank of New York. Elizabeth Warren called for him to resign that post on Sunday. Warren, who chaired the congressional committee that oversaw the bank bailout program known as TARP and is running for the Senate, said he should not be on the panel advising the Fed on bank management and oversight.

“We need to stop the cycle of bankers taking on risky activities, getting bailed out by the taxpayers, then using their army of lobbyists to water down regulations,” Warren said.

Dimon has struck a more contrite pose since revealing the losses. In an interview that aired on Sunday, he told NBC’s “Meet the Press” the bank’s handling and oversight of the derivative portfolio was “sloppy” and “stupid” and that executives had reacted badly to warnings last month that the bank had large losses in derivatives trading.

He said executives were “completely wrong” in public statements they made in April after being challenged over the trades in news reports. “We got very defensive. And people started justifying everything we did,” Dimon said. “We told you something that was completely wrong a mere four weeks ago.

The loss, and Dimon’s failure to heed the warnings, have become major embarrassments and have given regulators new arguments for tightening controls on big banks and requiring them to hold more capital to cushion possible losses.

Issues relating to the bank’s internal controls were raised in 2010 when it was fined 33 million pounds by Britain’s Financial Services Authority for failing to segregate client month from its own in the UK – an incident that also led to its auditor PwC being fined 1.4 million by its professional body for failing to spot the transgression.

No-one at PwC, JPM’s global auditor, could immediately be reached for comment.

JPMorgan lost $15 billion in stock market value the day after the latest loss announcement.

Dimon is scheduled to speak on Tuesday at the bank’s annual meeting in Tampa, Florida.

(Additional reporting by Carrick Mollenkamp in New York, Rick Rothacker in Charlotte, North Carolina and Drazen Jorgic in London; Editing by David Holmes)

(Reuters) – Stocks edged up on Friday after a strong outlook from chipmaker Nvidia and surprisingly robust consumer confidence offset a slide in bank shares after disclosures of huge trading losses at JPMorgan Chase & Co.

JPMorgan (JPM.N) said it lost at least $2 billion from a failed hedging strategy. The Dow component was down 7.3 percent at $37.76 and weighed on the entire sector.

Nvidia Corp (NVDA.O) rose 8.3 percent to $13.45 after reporting adjusted first-quarter earnings that beat expectations. The stock boosted the Nasdaq and was the S&P 500’s top percentage gainer.

U.S. consumer sentiment rose to its highest in more than four years in early May as Americans remained upbeat about the job market. The survey was a welcome sign amid worries that the economic recovery may be slowing down.

“It sort of runs against expectations,” said Sean Incremona, an economist at 4Cast in New York. “We were looking for a bit of a pullback here but consumers appear to be happy.”

Still, the S&P 500 was on track for its second weekly decline, although investors were encouraged after the index has rebounded from 2-month lows hit on Wednesday and looks set to close once again above April lows.

Marc Pado, a U.S. market strategist at DowBull.com in San Francisco, said traders had helped the market bounce by closing short positions – bets that stocks will fall – after gains at the start of May.

“The trader types see that we came down to that 1,340 area on the S&P 500, started to bounce, started to see some buying, some bottom fishing, then you got that consumer sentiment number and that was compelling enough,” he said,

The Dow Jones industrial average .DJI was up 5.41 points, or 0.04 percent, at 12,860.45. The Standard & Poor’s 500 Index .SPX was up 1.30 points, or 0.10 percent, at 1,359.29. The Nasdaq Composite Index .IXIC was up 15.16 points, or 0.52 percent, at 2,948.80.

JPMorgan estimates the business unit involved in the trading loss will lose $800 million in the current quarter, excluding private equity results and litigation expenses. The bank had previously expected the unit to earn a profit of about $200 million.

Jamie Dimon, the chief executive of the biggest U.S. bank by assets, cautioned that losses could grow by another $1 billion, another hurdle for a sector already besieged by the sovereign debt crisis in Europe and fears of slowing growth globally.

JP Morgan’s news weighed on bank shares as investors feared both a greater risk of more regulation and the potential for more such losses at other banks. However, the stocks were off their lows of the morning.

Citigroup Inc (C.N) lost 3.2 percent to $29.67 and the Financial Select Sector SPDR (XLF.P) was off 0.4 percent to $14.72. The S&P financial sector .GSPF fell 0.5 percent, extending its month-to-date losses to 3.4 percent.

“There is no investment bank in the country that is more respected and viewed as more capable of dealing with risk management than JP Morgan,” said Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.

“This makes it clear that derivatives are risky for anybody to run and we have to be more careful with exposing the system to the risk of derivatives,” he said.

Financial stocks have been among the most volatile in recent months as investors question what the growth outlook for the United States and the debt crisis of Europe will mean for the group’s profits. JPMorgan has fallen 12.2 percent this month.

The CBOE VIX Volatility Index .VIX is up 9 percent this month in a sign of growing caution, although it eased somewhat on Friday.

Thomson Reuters/University of Michigan’s preliminary consumer confidence index for May improved to 77.8 from 76.4 in April, topping forecasts of 76.2.

Of the 453 companies in the S&P 500 that have reported earnings to date for Q1 2012, 66.2 percent have reported earnings above analyst expectations, according to Thomson Reuters data.

That compares with more than 80 percent at the start of earnings season and is below the average for the past 4 quarters of 68 percent.

Shares of Arena Pharmaceuticals Inc (ARNA.O) rose 64.5 percent to $6.01 after a panel of experts recommended approval of the company’s obesity pill, a big step toward making it the first new diet drug on the U.S. market in more than a decade. The stock was the most actively traded on the Nasdaq composite.

(Editing by Dave Zimmerman)