“If Australia seriously wants to be considered as a financial center, if we seriously want to be regarded as a global financial services hub, then the days of having a monopoly in our capital and financial markets need to come to an end,” Bowen told reporters.

Plans call for the second exchange to be set up by an Australian subsidiary of Chi-X Global Inc., a unit of global broker Instinet, owned by Nomura Holdings. Chi-X Global operates markets in Europe and Canada.

Bowen said Australias regulator, the Australian Securities and Investments Commission, will take over supervision of the Australian market this year from monopoly holder Australian Securities Exchange Ltd., known as ASX Ltd., while Chi-X Australia Pty. Ltd. settles in.

Bowen said a final decision on Chi-Xs license will be made after the necessary regulatory framework was in place and other requirements had been met. He said the in-principle approval allowed the regulator to prepare guidance for competition and permits detailed negotiations on how the second exchange will operate.

“I have received advice from ASIC that Chi-X is well on its way to meeting the legislative requirements necessary to be granted an Australian license,” the minister said in a statement.

Bowen said other companies had applied for licenses: Liquidnet Australia Pty. Ltd., a subsidiary of U.S. company Liquidnet Holdings Inc., and AXE ECN Pty. Ltd., which is owned half by New Zealand Exchange Ltd., that countrys national stock exchange, and half by Australian companies.

“My understanding is that neither of those applicants is pressing their application at the moment,” Bowen told reporters.

ASX stock fell 1.71 percent to an eight-week low on 34.43 Australian dollars ($31.69) in early trading after the government announcement.

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The CFTC is holding a public meeting Thursday to gather views from exchanges, banks and traders on restricting the amount of trading in gold, silver and copper futures by market players who are solely financial investors.

The discussion also will focus on how transparent prices are in the metals futures markets and how they are influenced by developments in the physical markets.

The agency in January took a first step aimed at reining in oil speculation, proposing new limits on trading in energy futures by Wall Street firms and other market players. One of the five CFTC commissioners, at least, wants caps on speculative trading also extended to the markets for agricultural products and metals - in a comprehensive effort to prevent market manipulation.

“I strongly support thoughtful position limits in the metals complex,” Commissioner Bart Chilton, a former Clinton administration official, said recently.

Yet there appears to be scant support for the move among Chiltons colleagues, who have not voiced positions publicly.

Gold may glitter but it lacks the political heat generated by talk of limits on oil speculation as consumers get squeezed at the gas pump and airlines see their fuel bills rocket in an already tough business climate.

In September 2008, at the height of the financial crisis, the House ignored a veto threat from President George W. Bush and approved measures aimed at curbing speculation in oil markets.

The price of gold leaped 24 percent last year, trading above $1,000 an ounce and making experts wonder if it might become the next bubble, in the wake of the mortgage and credit crises. Some forecasters see it going to $1,200, $1,500 or beyond, unless the buying frenzy halts.

Gold first reached $1,000 in March 2008, soon after the collapse of investment bank Bear Stearns and mounting anxiety over the stability of the financial system. Then, in the Gold Rush of 09, investors snapped up gold to protect themselves against the falling dollar. Currencies have been weak investments around the world because of record-low interest rates stemming from the financial crisis.

Gold for April delivery finished at $1,088.80 an ounce in U.S. trading Wednesday. That was actually its lowest price in more than a month, a $14.90 decline from the day before. Gold prices came under pressure after the dollar surged because of the latest debt problems in Europe. Silver and copper followed gold lower.

The Wall Street banks that invest in and manage billions in commodities, and reap handsome profits from the business, argue that trading by speculative investors helps inject liquidity into markets and to establish accurate pricing. Imposing new volume limits on futures contracts will drive business overseas into less tightly regulated markets, they say.

Among those speaking at the CFTCs meeting Thursday are officials of CME Group Inc., owner of the Comex and the New York Mercantile Exchange, where metals futures are traded; the London Metal Exchange; NYSE Euronext Inc.; HSBC Bank USA; Barclays Capital, and Triland USA, a division of Mitsubishi Corp.

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One big reason: The government seized control of Fannie Mae and Freddie Mac, massive companies that purchase home loans, package them into investments and guarantee them against default. The price tag has been huge - $126 billion and growing.

Now comes the hard part: figuring out what to do next.

With the Obama administration largely mute on the issue, Congress will hold its first hearing Tuesday about how to restructure the mortgage system in the wake of the financial crisis.

Working out a new system is likely to take years. For the time being, the market is still resting on three government pillars: Fannie, Freddie and the Federal Housing Administration.

There has been plenty of talk in recent months about how to scale back reliance on those behemoths, which own or guarantee half of all mortgages.

Fannie and Freddie were effectively nationalized by regulators in September 2008, and their role in the marketplace has only grown since. Last year, they backed about 70 percent of all home loans, according to Inside Mortgage Finance, a trade publication. The duo also manage the Obama administrations $75 billion loan modification program.

But the housing recovery remains too fragile and feeble for the government to step away. Even staunch free-market advocates who want to get rid of Fannie and Freddie in the long run dont see that happening anytime soon.

“The first priority is we have to keep financing homes, and we dont have a way to do that without Fannie and Freddie,” said Peter Wallison, a senior fellow at the conservative American Enterprise Institute. “We have to deal with the realities of where we are today.”

Since the government took over Fannie and Freddie, Obama officials have given few details on their long-term thinking, apart from saying that they want to delay a legislative proposal until next year.

“If we rushed it, the risk is we would not achieve enough and not get consensus on something sweeping enough,” Treasury Secretary Timothy Geithner told lawmakers recently.

Geithner, in testimony prepared for Tuesdays hearing held by the House Financial Services Committee, added that such action should wait until “a time of greater market stability.” Obama officials also plan to seek public comment on a list of questions to be published next month.

On Capitol Hill, however, Republicans are impatient. They argue that the governments push to expand homeownership through Fannie and Freddie was the main cause of the financial crisis. They are proposing to phase out Fannie and Freddie within four years.

“Something has to be done sooner rather than later, while there is some political will,” said Rep. Scott Garrett, R.-N.J.

If lawmakers wait too long to tackle Fannie and Freddie, he said, “we will have forgotten the problems that they caused.”

But powerful interests dont want to rock the boat too hard. The National Association of Realtors is pushing to preserve Fannie and Freddie, but as nonprofit government authorities without private shareholders.

“The disruption in the marketplace by doing something too radical would be harmful” to the housing market and the economy, said Vince Malta, a San Francisco Realtor who is testifying at Tuesdays hearing.

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Its a hard reality for a generation that views home ownership as a given after reforms more than a decade ago created a housing market open to the masses. Its also a challenge for leaders whose reliance on rising property values and land sales to property developers risks letting the market spiral out of control.

“I sigh at every fancy apartment building I see on the way to work everyday, but that wont change anything,” says Yang, whose train ride to work at a trading company takes her past legions of high-rise apartment blocks. “My salary increases but it cant catch up with rising housing prices.”

The issue is getting top billing at Chinas annual legislative session, the partys main forum for explaining its policies and responding to public complaints.

“We will resolutely curb the precipitous rise of housing prices in some cities and satisfy peoples basic need for housing,” Premier Wen Jiabao pledged in his annual address to lawmakers, Chinas equivalent of the State of the Union speech.

The government has raised taxes and required downpayments - now a minimum 30 percent for even first-time home buyers - and warned big state companies and banks against speculative, risky investments. But no major immediate changes are expected.

“Chinese top leaders have become more and more sensitive to strong nationwide voices on issues, but the sensitivity is only at the PR level,” says Ding Xueliang, a China expert at Hong Kongs University of Science and Technology.

Rising property prices have underpinned economic growth rates, benefiting local governments that tend to be heavily invested in property development and other related businesses. Land sales often help finance construction projects that are also a lucrative source of income for many officials.

“The central government will say things to please the popular mood, but local governments have way too many vested interests in the property market to make major changes,” said Ding.

Property prices have risen almost constantly since China set up a commercial housing market in the late 1990s, allowing families to buy, at deep discounts, the low-rent government-owned apartments they were living in.

Since then, real estate has burgeoned into one of the countrys biggest drivers of growth, a creator of vast numbers of jobs in construction and related industries and - as elsewhere - a source of much of the countrys wealth.

Rising housing prices have benefited many. But younger Chinese hoping to replicate their parents homeowner lifestyles, and the legions of rural Chinese now moving to the cities, are priced out of the market.

A flood of bank lending meant to fend off recession pushed property sales up 75 percent to 4.4 trillion yuan ($644 billion) last year, making China the worlds biggest property market, by some estimates.

“I really have no idea of what to do about housing prices. Unless you get help from your parents or earn more than 500,000 yuan ($73,000) a year, you cant afford to buy,” said Shen Junlong, a 29-year-old IT manager at a company affiliated with Shanghais Baosteel Group.

“Living costs are always higher than what you can put in the bank,” said Shen, whose 160,000 yuan ($23,530) annual income is about four times the national urban average.

Sales volume has slowed in recent weeks following the governments latest market-cooling measures but prices continued to rise. Real estate agent Century 21 reported deals in Shanghai averaging 15,000 yuan ($2,200) per square meter in February.

In Beijing and Shanghai, residential prices soared to an average of more than 12,000 yuan ($1,700) per square meter, double the level three years ago, according to a December report by U.S. bond manager Pimco.

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“The geriatric market represents Risperdals second wave of growth,” J&J officials wrote in the business plan. “The aging population will continue to drive market growth well into the next century.”

Louisiana officials cited the document and dozens of other internal J&J files in its lawsuit claiming the company marketed Risperdal to the elderly and children for unapproved uses. Professor Jerry Avorn of Harvard Medical School, who isnt involved in the case, called the papers “one of the more egregious examples” of marketing drugs to vulnerable patients.

“By 2010, most grownups in medicine know that drug companies resort to unsavory practices to promote drugs, but seeing such clear evidence in black and white of the details of a campaign like this is still pretty upsetting,” Avorn said.

Any Condition

Under U.S. law, a doctor can prescribe a medicine for any condition, as long as its licensed by the FDA and proven safe and effective against at least one ailment. Drug companies, however, arent allowed to promote a drug for uses other than those approved by the FDA. Risperdal until 2003 was approved only for psychotic disorders including schizophrenia; it was never approved for dementia.

J&J, based in New Brunswick, New Jersey, and its Ortho- McNeil-Janssen Pharmaceutical unit, deny engaging in such “off- label” marketing. They said they will fight the lawsuit, in which Louisiana seeks hundreds of millions of dollars in fines and reimbursement of public funds spent on Risperdal.

Louisiana “does not cite any evidence that Janssen made misrepresentations or engaged in off-label promotion of Risperdal and does not identify any connection between defendants alleged conduct and Louisiana doctors decisions to prescribe Risperdal rather than other drugs,” J&J said Nov. 30 in court papers asking a state judge in Opelousas to dismiss the case. The judge rejected the motion and set trial for September.

Body of Evidence

Greg Panico, a spokesman for J&Js Janssen unit, said in an e-mail that the case “should be decided on the body of evidence, including testimony, not on the basis of excerpts from documents.”

J&J has been sued by 10 states over Risperdal sales practices, and other states have expressed an interest in similar suits, according to regulatory filings. It hasnt reserved money for a settlement. Risperdal global sales peaked at $4.5 billion in 2007, declining after the company lost patent protection, company filings showed.

Four J&J competitors that also make atypical antipsychotics paid a total of more than $2.5 billion to resolve government claims they marketed medicines for off-label uses. Eli Lilly & Co. paid more than $1.6 billion over Zyprexa and AstraZeneca Plc agreed to pay $520 million for Seroquel.

This Very Conduct

“It was this very conduct — marketing an atypical antipsychotic for dementia rather than for psychosis — that led to the $1 billion plus settlement with Eli Lilly,” said Patrick Burns, of Taxpayers Against Fraud in Washington.

The Justice Department alleged that some Risperdal sales growth came illegally. It sued J&J Jan. 15, claiming the company paid kickbacks to Omnicare Inc., the largest U.S. pharmacy for nursing home patients, to buy and recommend drugs including Risperdal.

The kickbacks included payments that boosted overall J&J sales to Omnicare from $100 million in 1999 to $280 million in 2004, the Justice Department alleged. Annual purchases of Risperdal rose to more than $100 million, the U.S. said. J&J denied any wrongdoing.

Omnicare provided a physician prescriber list in June 1999 to the ElderCare sales force of the Janssen unit, according to a J&J document filed in the U.S. lawsuit. The names were intended “to increase the call frequency on these resistant prescribers and to eventually influence them to use more Risperdal in the elderly demented patient.”

Lawful and Appropriate

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“To me, its less about being number four or number two on a global scale — its more important to have scale where we choose to be,” Rasmussen said from his office in the companys Copenhagen headquarters. “Very big, serious acquisitions are not really what we have on our mind right now.”

Carlsberg made its biggest acquisition in 2008, teaming up with Heineken NV to buy and break up Scottish & Newcastle Plc for 7.8 billion pounds ($11.9 billion). The brewer subsequently has focused on cutting costs and reducing capital expenditure, increasing free cash flow to 10.5 billion kroner in 2009.

The top four beer makers now control more than half the global market after two years of more than $75 billion of acquisitions including Heinekens purchase of Fomento Economico Mexicano SABs beer assets for 5.3 billion euros ($7.2 billion) in January, according to industry researcher Plato Logic Ltd. Anheuser-Busch InBev NV is the worlds largest brewer, with sales of $36.8 billion last year.

No Exits

Rasmussen, who was a regional president of Gillette Co. during its integration with Procter & Gamble Co., said the 163- year-old Danish brewer has no ambitions to expand in Africa, where SABMiller Plc, Heineken and Guinness-maker Diageo Plc are vying for share, or in Latin America.

Carlsberg “doesnt have a lot” left to do in Europe in terms of takeovers and will focus growth through purchases in China and the rest of Asia, he added. The company has no plans to exit any markets as there is “so much we can do in this business in terms of improving” efficiency, Rasmussen said.

Extending net debt, which stands at 2.7 times earnings before interest, taxes, depreciation and amortization, to a ratio of 3 times for a deal that makes strategic sense is “not a problem,” the CEO said. The company aims to get net debt to a ratio of 2.5 times or below, he added.

Carlsberg would require a rights offer or additional financing only for a “transformative” deal, which is not under consideration, Rasmussen said. There are no plans to refinance any debt because the terms wouldnt improve, he said.

Tuborg, Baltika

“Carlsberg has limited flexibility in its balance sheet for further acquisitions and it lacks the scale to compete for major transactions with the larger multinationals,” Alex Oldroyd, an analyst at Barclays Capital in London, said in a note to clients last month. “We think its Asian footprint is more attractive than perhaps it gets credit for.” Oldroyd has an “equal-weight” rating on the shares.

The maker of Tuborg and Baltika, Europes best-selling beer, doesnt expect European markets to return to volume growth in 2010, as consumers remain “conservative” with personal spending and Russian beer drinkers grapple with price increases following a tripled excise tax in the country, the CEO said.

“2010 is still going to be another tough year where we need to really look after cash generations and costs,” Rasmussen said. “We are not going to be back in normal times.”

Russia

In Russia, where the company generates about 45 percent of earnings at its Baltika unit, Carlsberg is battling a campaign by President Dmitry Medvedev to lower alcohol consumption.

So far, the brewer has passed on only part of the excise increase through higher prices, though ultimately “the consumer has to pay,” Rasmussen said, declining to comment on the timing of possible increases.

Carlsberg expects annual beer consumption in the worlds third-biggest market by volume to return to about 80 liters (21 gallons) per person, from as low as about 60 liters at present when the economy improves and the political climate around beer stabilizes. The brewer assumes volume growth of 3 to 5 percent in the market over the longer term, he said.

“In every market, every government has these discussions on alcohol,” the CEO said. “Its part of the game. This is part of being in the business we are in.”

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“Were flat-to-higher this morning as the market consolidates before the jobs report,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “Its really external factors like the currency markets directing oil right now, with the stronger dollar capping gains beyond $80.”

Crude oil for April delivery rose as much as 60 cents, or 0.8 percent, to $80.81 a barrel, in electronic trading on the New York Mercantile Exchange. The contract was at $80.67 at 9:50 a.m. London time. Brent crude oil for April delivery rose 45 cents to $79 a barrel on the London-based ICE Futures Europe exchange.

Oil dropped yesterday in New York as the dollar climbed against the euro after European Central Bank President Jean- Claude Trichet kept the benchmark interest rate unchanged and extended stimulus measures. The dollar traded at $1.3595 to the euro at 9:07 a.m. London time, compared with $1.3581 yesterday.

“The market is anticipating better unemployment data in the U.S. tonight, so that has given us a positive outlook,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “Our expectations and prospects are for consumption of crude to pick up.”

Initial Claims

Initial jobless applications in the U.S. dropped by 29,000 to 469,000, in line with the median forecast of economists surveyed by Bloomberg News, Labor Department figures showed yesterday.

A report due at 8:30 a.m. in Washington today may show payrolls declined by 65,000 workers last month, more than the prior months drop of 20,000, according to the median of economist estimates.

Oil also gained on a report that the Organization of Petroleum Exporting Countries will cut shipments by 2.3 percent in the month ending March 20.

OPEC, which supplies about 40 percent of the worlds crude, will ship 22.87 million barrels a day in the four-week period, compared with 23.42 million a month earlier, the Halifax, England-based tanker-tracker Oil Movements said yesterday in a report. The data excludes Ecuador and Angola.

OPEC Quotas

U.S. crude inventories last week climbed a more-than- expected 4.03 million barrels to 341.5 million barrels, the Energy Department said on March 3. Stockpiles in the Gulf of Mexico region, where the majority of U.S. refining capacity is located, climbed by 1.8 million barrels.

Some of this gain may have come as a result of the narrowing contango, when prompt prices are lower than later- dated supplies. The price difference between the April contract and May futures has dropped to 42 cents a barrel today from 62 cents a barrel on Feb. 3.

A theme in the market “has been the flattening of the prompt end of the price curve,” said Barclays Capital analysts in a March 3 research note. “We wonder if the collapse of the contango is causing the last dregs of the floating storage to start washing up in the U.S. data.”

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“The market is still well-supplied, perhaps even over- supplied,” said Gerrit Zambo, a trader at Bayerische Landesbank in Munich. “Eighty dollars a barrel is too much for the moment. But fundamentals are of secondary importance. The direction is coming from equity markets and economic data.”

Crude oil for April delivery was at $78.51 a barrel, down 19 cents, in electronic trading on the New York Mercantile Exchange at 9:52 a.m. London time. Yesterday, the contract fell 96 cents to $78.70. Futures have lost 1 percent this year. Brent crude for April declined 11 cents to $76.78 a barrel on Londons ICE Futures Europe exchange.

Demand for crude produced by the Organization of Petroleum Exporting Countries could drop by 100,000 barrels a day this year as stockpiles are higher than the five-year average and the global economy is weak, U.A.E. Oil Minister Mohamed Al-Hamli said in Abu Dhabi today.

Commercially held U.S. crude stockpiles have risen to 5.1 percent above the five-year average level, even as refiners raised processing runs, Energy Department data showed. Imports increased 6.3 percent to 9.08 million barrels a day in the week ended Feb. 19, the highest level since October.

Fuel Stockpiles

The Energy Department will release its Weekly Petroleum Status Report at 10:30 a.m. tomorrow in Washington.

Refineries operated at 81.2 percent of capacity last week, unchanged from the previous week, according to the median of responses in Bloombergs survey.

Stockpiles of distillate fuel, a category that includes heating oil and diesel, probably fell 500,000 barrels from 152.7 million the prior week, according to the survey. Six of the respondents forecast a decline, one predicted an increase and one said there was no change.

Analysts were split over whether gasoline supplies increased or declined. Inventories probably rose 50,000 barrels from 231.2 million, the survey showed. Four of the analysts anticipated an increase, two predicted a decline and two said inventories were unchanged.

API Report

“In terms of the oil markets internal supply and demand fundamentals, the picture remains fairly soft,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “Theres ongoing speculation that were going to need some firmer physical fundamental data to push oil higher.”

The dollar strengthened for a second day against the euro, damping the investment appeal of commodities, including gold. The U.S. currency traded at $1.3490 against the euro at 9:52 a.m. in London, after gaining 0.5 percent to $1.3560 yesterday.

“The dollar was firmer overnight and that softened oil prices,” said Hassall at CWA Global Markets.

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“The fact that he is going to China second, after the United States, tells you the importance they place on China relative to other markets,” said John Bonnell, a J.D. Power analyst. “Toyota wants to make sure it puts its best foot forward, not only with its best products but in instilling confidence.”

The number of Toyota vehicles being recalled in China is small compared with the 8.5 million vehicles recalled worldwide since October for sticky gas pedals, faulty floor mats and glitches in braking software.

China overtook the United States as the biggest auto market last year with a 48 percent jump in sales and automakers are looking to it to offset weak global demand and drive future growth.

China could be critical to Toyota as quality worries batter sales elsewhere, said Zhang Xin, an industry analyst for Guotai Junan Securities in Beijing.

“Its very important. Toyota in the North American market was almost finished in the short-term, so it has to secure its Asian market. Its biggest market in Asia is China,” Zhang said. “It must focus on this.”

Chinas state-controlled media have made only muted comment on the recalls, in contrast to the blistering criticism Toyoda faced from American lawmakers.

“I think he is also coming to say, Thanks. The U.S. side continues to put him under great pressure, but China doesnt,” said Rao Da, general secretary of the China Passenger Car Association, an industry group.

The flood of recalls in the United States has shaken confidence in Toyotas reputation for excellent quality. In China, the company announced a recall of 75,552 RAV4 sport-utility vehicles in late January due to the gas pedal problem.

Toyotas February sales by its two local joint ventures with state-owned partners were up from a year earlier, according to Passenger Car Association estimates. Sales for its venture with Guangzhou Automobile Group climbed 50 percent to 17,500 units. Sales at its FAW Group venture jumped 106 percent to 40,400 units.

“So far, its hard to see any direct impact on Toyotas sales,” said Rao. “The crucial thing for them is brand reputation. If they dont pay great attention to this, it will eventually hurt the customers trust.”

A spokesman for Toyota China, Niu Yu, said monthly sales figures would be released Tuesday.

“There is certainly an impact on Toyotas sales here because even kids today know about the incident. There are a lot of people calling us and asking questions,” Liu said.

Toyota got a relatively late start in China, after fitful efforts to break into the market using tie-ups between its subsidiary Daihatsu Motor Co. and state-run Tianjin Automobile Industry Holding Co.

Toyota rolled out its first made-in-China Camry in May 2006.

Sales growth lagged other foreign brands last year due to Toyotas focus on bigger cars while the government promoted smaller vehicles with tax breaks and subsidies. Toyota sales rose 50 percent, compared with 76 percent for Volkswagen AG and 219 percent for General Motors Co.s Chevrolet unit.

Toyota is preparing to launch a lower-cost brand for China in response to demand for smaller cars, according to analysts.

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Prudential Chief Executive Officer Tidjane Thiam is trying to boost the insurers sales in Asia as growth in the U.K declines. By acquiring AIA, Thiam gets a business with more than 90 years in Asia, more than 20 million customers and more than $60 billion of assets in 13 markets in the region. The purchase price is about 50 percent more than Prudentials market value.

“If you look at the price, it shows the company is very bullish on the Asia market,” said Luo Yi, a Shenzhen-based analyst at China Merchants Securities Co. “The Chinese market has vast potential.”

The sale, the biggest in the insurance industry excluding government bailouts, would be AIGs largest disposal since it received a U.S. government bailout in 2008. AIG had planned an initial public offering for the Hong Kong-based unit to help repay its $182.3 billion rescue. Though AIG executives believe an IPO would have a value similar to Prudentials bid, the sale offers more cash up front, a person briefed on the matter said.

Competing Offers?

Prudentials offer may tempt rivals to bid for AIA, especially if AIG were prepared to lower its asking price, said Eamonn Flanagan, a Liverpool-based analyst at Shore Capital Group Plc who has a “buy” rating on Prudential stock.

The offer equals 1.5 times to 1.7 times the embedded value of AIA in 2009, one of the people said. Embedded value estimates a companys net worth excluding new business.

The rights offering would be about equal to Lloyds Banking Group Plcs 13.5 billion pounds ($20.4 billion) sale in December, still the U.K.s biggest.

“If youve got backing from a few banks and a few major shareholders, there will be a way to make this deal happen,” said Marcus Barnard, a London-based analyst at Oriel Securities Ltd. with a “sell” rating on the stock. “The question is the cost and the risk involved.” The insurer may be forced to sell assets in India and China to comply with local foreign-ownership regulations, he said.

Different League

Thiam was in New York last week meeting with AIG executives to discuss the bid, one of the people said. Thiam said in a Feb. 17 interview that he wants to raise the proportion of sales from Asia to 80 percent by 2015 from 50 percent now. Prudential operates in 13 Asian nations and is seeking to offset slower growth in the U.K.

An acquisition of AIA, founded in Shanghai in 1919, would give Prudential a business with 20,000 employees and 250,000 agents in markets spanning China to Australia. AIA sells life, accident and health insurance policies, and private retirement planning and wealth management services, its Web site shows.

London-based Prudential has a market value of 15.3 billion pounds. The stock has more than doubled in the past year. The shares rose 2.3 percent to 602.5 pence in London trading on Feb. 26. The company has an A+ credit rating with a negative outlook at Standard & Poors and an A2 rating with a negative outlook at Moodys Investors Service.

IPO Planned

AIG said last May that it would pursue an IPO of AIA after an auction of the business failed to turn up bids that matched what AIG executives thought the company was worth. That included a bid from Prudential that valued AIA at about $15 billion, one of the people said.

The sum raised in the sale would exceed the total of more than 20 other asset sales announced by AIG, which has struck deals to raise more than $12 billion by selling units, including a U.S. auto insurer and equipment guarantor.

AIG had a fourth-quarter net loss of $8.87 billion, narrowing from $61.7 billion a year earlier when the insurer recorded the biggest loss in U.S. corporate history, the company said Feb. 26.

The insurer gave stakes in American Life Insurance Co., known as Alico, and AIA, its biggest non-U.S. life insurance units, to the Fed in December. MetLife Inc. has said it is in talks to buy Alico, which operates in more than 50 countries outside the U.S.

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