But that does not mean all of the 200 people in the audience were ready to send their money to the Mediterranean peninsula.

In less than three months, the Italian prime minister has led a quick turnaround of Italy and its 1.9 trillion euro ($2.5 trillion) debt, implementing a tough pension reform, showing his ability and will to move Europe’s third-largest economy ahead.

With his understated, toned-down style, he could not be further from the flamboyant theatrics of his predecessor, Silvio Berlusconi, which is just what Wall Street likes.

U.S. investors will need to see more action from the 3-month-old government to believe Monti’s pledge that the “Euro crisis is nearly over.” Italy’s reforms must continue at a quick pace and actually generate economic growth before their applause translates into investments.

A solid financial firewall must be established in Europe to prevent crisis from spreading, those who welcomed Monti to Wall Street said after he returned to Rome.

“It’s been impressive how quickly the sentiment has changed on Italy,” said Charlie Himmelberg, managing director at Goldman Sachs, noting that the euro zone central bank had helped.

“With the ECB’s LTRO (Long Term Refinancing Operation) having removed much of the funding pressure on banks, the bigger risk now would be renewed sovereign concerns due to weaker-than-expected macro data. The recession in Italy is continuing; it is only a matter of how long and deep it will be.

“We’ve been constructive on Italian bonds, but now that spreads have tightened, we are closer to fair value.”

The spread peaked at 576 basis points in mid-November. Since then, the 10-year yield spread between Italian and German bonds, a measure of the market’s perceived risk, fell to a low of around 345 points last week.

With Italy needing to refinance a massive 60 billion euros by April, bond experts say there is a real possibility of the spread widening again, or at least limited room for immediate further improvements.

“In the best case the (10-year spread) can fall to around 200 basis points by the end of 2013,” said Alessio De Longis, with the global debt team at OppenheimerFunds. For the Monti government, after its brilliant start, “the toughest part comes now,” he said.

REFORMS, GROWTH ARE ESSENTIAL

“It is a good thing that Monti visits investors,” said Blaise Antin, head of sovereign research at TCW, in Los Angeles. “But plenty will ultimately depend on the Italian parliament” and how it will back the tough choices ahead.

A key reform of the job market, aimed at making hiring and firing more flexible, is expected to be reached with unions by the end of March.

During his long stint in office, Berlusconi never met with foreign investors. He sometimes invited Italian businessmen to private dinners, but he left the head of the Treasury and his ministers the task of meeting with foreign business communities.

Lack of growth is the biggest risk Italy faces. The Bank of Italy said last week that Italian gross domestic product is expected to contract by 1.2 percent in 2012. The more the economy contracts, tax revenue will shrink, making it harder for the government to reach its goal of a balanced budget by 2013.

The danger is either missing the commitment or falling into a vicious cycle of further budget cuts and more recession.

Equities and fixed income investors may need time and more hard evidence before they move money into Italy, but some say spring has already arrived for niche sector venture capitalists.

“I cannot talk about specific customers, but we noticed significant interest by strategic U.S. investors for particular activities in Italy right now,” said Joseph Del Raso, a partner with law firm Pepper Hamilton LLP and president of the National Italian American Foundation.

More than two dozen people who attended Monti’s Wall Street speech said they liked what they heard. “At least he can express himself in proper English,” said one woman, who declined to be named. Others applauded his jump-starting Italy’s new government, but all agreed it is not enough to restore confidence in Italy.

“Monti did not bring news, but his visit played an important role. We can now say: ‘Look, things have changed. We now have competent and serious people leading our country,’” said Gian Luca Clementi, economist at New York University.

Granted, the 200 and possibly more people in the boardroom at the NYSE last Friday were likely biased. A large number were members of the Bocconi Alumni Association of Milan’s Bocconi University, where Monti taught for years. Others in the room and on the floor of the stock exchange were of Italian descent.

A trader who demonstrated the exchange’s technology to Monti had the logo of Juventus, one of Italy’s best-known soccer teams, attached to his identification badge.

“He is capitalizing upon America’s longstanding affection for Italy,” said Steve Acunto, honorary deputy consul in New York. “You cannot underestimate the presence in financial circles of people of Italian extraction who have affection for Italy.”

That affection for Italy and Monti notwithstanding, it will take significant progress to turn it into hard cash.

(Editing by Dan Grebler)

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The settlement with the U.S. Securities and Exchange Commission was announced on the day a trial on the lawsuit was scheduled to begin in Brooklyn, New York.

Ralph Cioffi and Matthew Tannin were found not guilty of all charges in 2009 in a parallel criminal case brought by the U.S. Department of Justice. The jury rejected prosecutors’ arguments that the two men committed fraud by lying to investors about the health of their hedge funds, which were stuffed with securities backed by risky home loans. The funds imploded in mid-2007.

It was the first high-profile criminal prosecution of Wall Street executives stemming from the 2008 financial crisis, and the acquittals were a big blow to the government.

U.S. District Judge Frederic Block must sign off on the proposed settlement with the SEC, which was approved by the agency’s commissioners at a meeting last week.

Block told lawyers for each side that he was inclined to approve the deal. But he criticized the proposed penalties as “chump change” compared to the $1.8 billion that the SEC says was lost by Cioffi and Tannin’s investors when the two hedge funds collapsed.

SEC lawyer John Worland told Block he thought the deal was a good one, given that the agency is not authorized to sue for damages on behalf of investors.

The judge also chastised the parties for waiting until the last minute to reach a deal in a case that has been pending since 2008. Block said he had set aside three weeks for the trial, which would have covered much of the same ground as the criminal case.

Lawyers for Cioffi and Tannin declined to comment.

Under the settlement, Cioffi will give up $700,000 of profits and pay a civil penalty of $100,000; Tannin will give up $200,000 of profits and pay a $50,000 civil penalty.

Cioffi will be barred from working in the securities industry for three years, while Tannin will be barred for two years,

The men are not admitting or denying wrongdoing, lawyers said.

Lawyers for the two sides said the settlement is centered on a charge that the defendants committed securities fraud through negligence, which does not require either side to address whether the defendants intended to defraud or deceive their clients.

Bear Stearns, on the verge of failure because of losses on mortgage-related investments, was acquired by JPMorgan Chase Co in March 2008.

The case is SEC v . Cioffi, in the U.S. District Court for the Eastern District of New York, 08-2457.

(Reporting by Jessica Dye; Editing by Martha Graybow, Steve Orlofsky and John Wallace)

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Stocks took a hit, the euro dropped below $1.30 and the borrowing rates rose for Italy and Spain, an indication of renewed investor concerns that they will eventually be dragged back into the crisis that had shown some signs of easing over the past few weeks.

The prevailing view for much of this year has been that Greece would get its second bailout in less than two years and that’s helped shore up markets following the febrile atmosphere of 2011. For months, Greece has been discussing the details of a planned bailout worth euro130 billion ($170 billion) and an accompanying euro100 billion ($131 billion) debt writedown by private bondholders.

Jean-Claude Juncker, who heads eurozone finance meetings, promised more clarity on Monday, when he said decisions will be made on Greece. His comments came as relations between Greece and its partners in the eurozone — especially Germany — hit a new low with strong comments on both sides.

However, over the past few days worries have grown that a deal may not emerge, that Greece could default within a month, and that the country’s eurozone partners may be contemplating what had previously been thought very unlikely — pulling the plug on Greece and allowing it to default.

“Whilst there have been suggestions that Europe is much better prepared to face such an eventuality it is still difficult to believe that would be many politicians first choice because you just do not know what the reaction would be across the capital markets,” said Gary Jenkins, managing director of Swordfish Research. “Heck of a chance to take considering the fragility of confidence and the economy.”

That appears to be the main concern in markets on a day with little on the economic calendar. News that Moody’s could follow up its European sovereign ratings cuts earlier this week by downgrading dozens of European banks, utilities and other companies with close ties to government finances added to the prevailing gloom.

In Europe, the FTSE 100 index of leading British shares was down 0.8 percent at 5,845 while Germany’s DAX fell 1.2 percent to 6,674. The CAC-40 in France was 0.7 percent lower at 3,364.

The euro was also 0.3 percent lower at $1.3007, having dipped below that level earlier.

The yield on Italy’s ten-year bond rose 0.20 percentage points to 5.84 percent while Spain’s rate rose another 0.16 percentage points to 5.55 percent. Though both are still down from the 7 percent mark that is considered unsustainable in the long run, the increases are the biggest daily movements in weeks.

Wall Street was also poised for a lower opening — Dow futures were down by 0.3 percent at 12,728 while the broader Standard Poor’s 500 futures fell 0.4 percent to 1,336.

The focus will likely remain on Greece prior to Monday’s meeting of eurozone finance ministers.

Greece was asked last week to meet three demands so it could get the bailout cash which it needs to avoid defaulting on its debts on March 20, when a big bond redemption is due. Other countries who share the euro currency insisted that the Greek Parliament agree on another batch of austerity measures, spell out a further euro325 million ($425 million) in Greek savings measures and give written assurances by the leaders of Greece’s coalition government that they will stick to those requirements even after an election scheduled for spring.

Even though all three conditions appear to have cleared, the eurozone is balking at finalizing the bailout, with some suggesting the money should not be handed over until after the election.

On Wednesday evening, after a three-and-a-half-hour conference call between the 17 eurozone finance ministers, more hurdles were put in front of Greece.

Though Juncker said Greece had made “substantial further progress,” he added that “further considerations are necessary regarding the specific mechanisms to strengthen the surveillance of program implementation and to ensure that priority is given to debt servicing.”

His statement suggests that Greece’s eurozone creditors may be insisting on a recent proposal by France and Germany to set up an account, separate from Greece’s general budget, that would be dedicated to paying off Greece’s massive debt. It was unclear whether this account would only manage the bailout money or whether government revenue could also be funneled into it.

Earlier in Asia, Tokyo’s benchmark Nikkei 225 index shed 0.2 percent to 9,238.10 and Hong Kong’s Hang Seng was off 0.4 percent at 21,277.2. Seoul’s Kospi fell 1.4 percent to 1,997.45. China’s Shanghai Composite Index lost 0.4 percent to 2,356.86.

In the oil markets, prices fell alongside equities despite ongoing concerns about developments in the Persian Gulf and conflicting reports about whether Iran is cutting crude exports to Europe — the benchmark New York rate was down 56 cents at a barrel at $101.26.

___

Joe McDonald in Beijing contributed to this report.

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The Dow Jones industrial average was up 111 points to 12,892 shortly after noon. That was a turnaround from Wednesday, when the index lost 97 points. Another surge could push the Dow to 13,000, a level it hasn’t seen since early 2008, before the financial crisis imploded.

The broader Standard Poor’s 500 rose 9 points to 1,353 and the Nasdaq composite was up 23 points at 2,939.

The Labor Department said weekly applications for unemployment benefits dropped for the fourth time in five weeks to the lowest point since March 2008. That was when the jobless rate was just 5.1 percent, far below the current rate of 8.3 percent.

The stronger reading on the jobs market led traders to sell Treasury bonds, a sign that they’re more comfortable plowing money into riskier assets like stocks. That pushed bond prices lower and sent the yield on the 10-year Treasury note sharply higher, to 1.99 percent from 1.93 percent. That’s a measure of the interest rate the government has to pay to get investors to buy the bonds.

The market has been rising slowly but steadily for most of the year, as investors shake off some of last year’s fears about a second recession and the SP’s August downgrade of U.S. debt, which proved to have minimal real effect on the economy.

John Burke, president of Burke Financial Strategies in New Jersey, thinks some of the calm has been caused by the Federal Reserve flooding the market with cheap money. The Fed has promised to keep interest rates near zero for the next several years, which could prop up the economy rather than force the U.S. to solve its growing budget deficit problem.

“They’re pushing the problem off,” Burke said. “We’re fine today, we’ll avoid (another) recession, but what’s that going to do to us when the term is up?”

European markets didn’t do as well. As it has for weeks, deal-making on bailing out Greece dawdled on without any real clarity. Greece is trying to negotiate with its lenders, including the 16 other countries that use the euro, for breaks on some of its loans coming due next month. If it doesn’t get the bailout, it will spiral into bankruptcy and could be forced to leave the euro.

Stock indexes in the U.K., Germany and Spain slid, though the ATHEX index in Greece climbed 1.1 percent.

The euro rose slightly to $1.31, a sign of improving confidence in Europe. The euro had been rising more or less steadily since mid-January, but stalled out late last week around $1.33. Portugal, another troubled euro zone country, reported 14 percent unemployment, the highest on record.

Some of the lenders, including richer euro zone countries like Germany, have complained that Greece hasn’t lived up to previous commitments to cut spending, a hard task in a country where citizens have grown used to extravagant government spending.

Gas prices could be a lurking problem, rising as Iran threatens to crimp its exports. The average price for a gallon of gasoline is around $3.52, up 23 percent since Jan. 1. That’s the highest ever for this time of year, and experts say it could climb to $4.25 a gallon by late April.

In other stocks making big moves:

• General Motors rose 7 percent, boosted by news that it had earned its highest profit ever in 2011, just two years after the auto giant teetered near collapse and had to be rescued by taxpayer money. The profit masked some troubling statistics, including losses in Europe and South America, but investors didn’t seem to mind.

• Jam maker J.M. Smucker plummeted 9 percent after the company missed analysts’ estimates for net income and revenue.

_Molson Coors rose 4 percent after the beer maker beat analysts’ expectations, helped by higher sales of Modelo beer in Japan and Coors Light in Latin America and China.

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Equity indexes continued to trade in tight ranges, with the SP 500 near a nine-month high.

U.S. labor, manufacturing and housing data suggested sustained momentum in the key economic sectors and confirmed the recovery continues at steady pace.

“We’re getting this incredible flow of good data,” said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis. “It’s hard not to want to step into the market.”

The euro zone is putting the finishing touches to a second bailout deal for Athens that could be approved on Monday, officials said, moving closer to averting a disorderly default by Greece.

“People are increasingly of the opinion that although Europe will continue to have flare-ups, it’s not likely to become a calamity for the world economy,’ Paulsen said.

The Dow Jones industrial average (.DJI) added 109.13 points, or 0.85 percent, to 12,890.08. The SP 500 Index (.INX) gained 10.52 points, or 0.78 percent, to 1,353.75. The Nasdaq Composite (.IXIC) rose 26.00 points, or 0.89 percent, to 2,941.83.

Bank shares rose, brushing off a warning from Moody’s about possible downgrades to the credit ratings of 17 global and 114 European financial institutions.

Among the ratings threatened were those of Goldman Sachs (GS.N), up 1.2 percent at $114.50, and Bank of America (BAC.N), up 2.8 percent at $8.

The KBW bank index (.BKX) rose 1.7 percent.

Apple (AAPL.O) shares, which largely dictated the direction of Wednesday’s stock market, were off 1.1 percent at $492.24.

Trading in Apple topped 17 million shares at midday, above its 15.4 million average in the last 25 days.

According to a Chinese newspaper website, some cities have asked retailers to take Apple iPad tablets off shelves after a legal battle between a Chinese technology firm and Apple over trademark issues.

(Reporting by Rodrigo Campos; Editing by Kenneth Barry)

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The Dow Jones industrial average dropped 97.33 points to close at 12,780.95. It was the worst one-day decline for the Dow this year, and the index narrowly avoided its first triple-digit loss for the year. The average was down as much as 125 points.

The Standard Poor’s 500 and the Nasdaq composite index climbed tentatively through the morning but gave up their gains by afternoon. The SP fell 7.27 points to 1,343.23. The Nasdaq fell 16 points to 2,915.83.

The declines were broad, with nine of the 10 industry groups in the SP recording losses. The only group that didn’t was materials, which was flat. Only five of the 30 stocks in the Dow rose for the day, and just barely.

In a 3 1/2-hour conference call with the finance ministers of the other 16 countries that use the euro, Greece offered assurances that it had found euro325 million in budget cuts in addition to harsh measures that it has already promised.

But in a sign of the distrust that has built during the European debt crisis, particularly among richer countries, a European official said Greece would need tighter oversight of its budget before it receives another bailout.

Greece needs the money before a big bond payment comes due March 20. A default would rattle the world financial system. For weeks, incremental movement in the Greek crisis has whipsawed U.S. stocks.

“Long story short, we long for the days when markets traded on fundamentals,” said David Katz, principal at WeiserMazars Wealth Advisors. He thinks stock picks have been ruled by emotion, rather than clear-eyed examinations of companies’ balance sheets, at least since the credit crunch in 2007 and the ensuing Great Recession.

“Just as quickly as you see the market pop up from one headline, then you see the downturn from another,” Katz said. “It doesn’t really have to be (big news). It’s not even the meat of the story, it’s the headline.”

Greece makes up just 2 percent of the total economic output of the 17 countries that use the euro. But investors are troubled by the fallout from a potential default and similar financial problems festering in other European countries, like Portugal, Italy and Spain.

“There is no shortage of people who would argue that Greece is a non-event,” said Dan McMahon, director of equity trading at Raymond James. “It’s more that it’s a barometer for the rest of the eurozone.”

Stocks have risen steadily all year, so some analysts argued that a slowdown was inevitable. The SP 500 ended 2011 at 1,258, and many analysts predicted it would end 2012 at 1,350. But it had already reached that level last week.

“When the market does in a few weeks what was expected for the year, it’s natural for the market to sort of pause and pinch itself and say, `Is this supposed to go on?’” said Brian Gendreau, market strategist for Cetera Financial Group.

“If it continued at the same pace for the rest of the year, that’s just unrealistic. You’d need an unrelenting drumbeat of good news, and we haven’t gotten that,” Gendreau said.

The price of oil climbed to its highest level in five weeks after Iran said it would cut off some exports of crude to Europe. Iran was responding to the European Union’s plans to embargo Iranian oil this summer, an attempt to pressure Iran to abandon its nuclear program. Benchmark U.S. crude rose $1.06 to end the day at $101.80 per barrel in New York.

The average retail price for a gallon of gas was $3.52. Gas prices are already the highest on record for this time of year, and economists fear that they could crimp the halting economic recovery. This time a year ago, gas was $3.12.

Apple stock went on a wild zigzag. It set an all-time high at midday, $526.29 per share, but fell sharply and closed down $11.79 at $497.67 after eight straight days of gains.

The decline appeared to be caused by rumors that the Nasdaq 100 index would adjust its components to give Apple, the biggest company in the world by market value, less weight. That would force mutual funds that track the Nasdaq 100 to sell Apple stock.

Those rumors may have been overblown. Nasdaq declined to comment on Apple but pointed out that it adjusts the index if a company’s market value represents more than 24 percent of the index. Apple represented about 17 percent at the end of the day Wednesday.

The euro fell slightly against the dollar to just under $1.31. The euro had been mostly rising since mid-January, but topped out around $1.33 late last week.

The yield on the U.S. government’s benchmark 10-year Treasury note fell to 1.93 percent from 1.94 percent. Yields fall and bond prices rise when investors decided to seek a haven for their money rather than take a bet on the stock market.

Among the biggest movers in the U.S. market:

• Comcast, the cable provider, climbed 5 percent after beating Wall Street expectations for profit and revenue. It managed to slow the loss of customers as it added channels and better customer service.

• Kellogg rose 5 percent after announcing it would buy Pringles from Procter Gamble. Diamond Foods had a deal to buy Pringles but got caught up in an accounting scandal. PG was flat, and Diamond was up 5 percent.

• Zynga, the maker of popular Facebook games like FarmVille, plummeted 18 percent after reporting it lost money in the fourth quarter. Zynga went public in December.

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BY THE NUMBERS: The Dow Jones industrial average dropped 97 points to close at 12,781. It was the worst one-day decline for the Dow this year.

TROUBLE IN FARMVILLE: Zynga, the maker of popular Facebook games like FarmVille, fell 18 percent after reporting a loss for the fourth quarter. It was Zynga’s first earnings report as a public company. Zynga closed at $11.80, still above the initial public offering price of $10 but well below Tuesday’s record high of $14.35.

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The SP 500 appeared set for a strong move off a nine-month high as Apple Inc (AAPL.O) shares gained 3 percent in early trading, helped by Tuesday’s disclosures that prominent hedge-fund managers had been buying the stock.

But Apple, the largest company by market capitalization, turned negative around midday and closed down 2.3 percent to $497.67, quickly reversing the Nasdaq index’s advance. The stock had climbed as high as $526.29 during the session.

The fortunes of both SP and Nasdaq have been closely tethered to Apple of late, with the benchmark SP index and Nasdaq a near-perfect correlation over the last 50 days, showing they are moving almost in lockstep.

Doreen Mogavero, chief executive of trading firm Mogavero, Lee Co, said from the floor of the New York Stock Exchange investors were concerned about a report that Apple had asked online retailer Amazon (AMZN.O) to halt sales of its iPad in China.

A Chinese technology firm is trying to ban shipments of Apple’s iPad tablet in and out of the country in a legal battle over the iPad name.

An Apple spokeswoman referred to the company’s website that says Amazon is not an authorized reseller of iPads in China or the United States.

Volume on the iPhone maker’s shares surged to 50 million shares, an increase of over 400 percent when compared with its 30-day average.

“This morning, in a bout of panic buying, Apple was up another 17 points, dragging a reluctant market along with it,” said Larry McMillan, president of McMillan Analysis Corp. in Morristown, New Jersey, in a report. The sharp decline “broke the market, and for the first time in quite a while, an early rally has degenerated into afternoon selling.”

Apple option flow was a total of 1.77 million contracts, surpassing the record of 1.3 million contracts set last Thursday, according to Trade Alert President Henry Schwartz. About 9 percent of the option volume marketwide was on Apple.

The SP hit a peak of 1,355.87, just shy of its July 2011 high. A break above that level would take the benchmark to its strongest since at least May of last year.

“You are looking at good old exhaustion inside of the market,” said Keith Bliss, senior vice president at Cuttone Co in New York. “From a technical standpoint, we had strong resistance at 1350, 1355 in the market, and there was no real appetite to get through it.”

The Dow Jones industrial average (.DJI) dropped 97.33 points, or 0.76 percent, to 12,780.95. The Standard Poor’s 500 Index (.SPX) lost 7.27 points, or 0.54 percent, to 1,343.23. The Nasdaq Composite Index (.IXIC) fell 16.00 points, or 0.55 percent, to 2,915.83.

Industrial stocks led declines on the SP 500, with Deere Co (DE.N) off 5.4 percent at $84.28 after investors expected the farm equipment company to give a stronger full-year forecast.

U.S. manufacturing output rose solidly in January and a gauge of factory activity in New York state hit a 1-1/2-year high in February, adding to a run of fairly upbeat data, even though overall industrial production was flat last month.

Decliners on the Dow, which underperformed the broader market, included industrial and material stocks like Caterpillar Inc (CAT.N), down 1.7 percent at $112.53.

Earlier the Dow industrials were trading near a 3 1/2 high and the Nasdaq was at a more than 11-year high.

Also weighing on the market, European Union sources said finance officials were examining ways of delaying parts or even all of a second bailout for Greece, while still avoiding a disorderly default. That rekindled fears about the region’s debt crisis.

Volume was solid with about 7.38 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 6.98 billion.

Declining stocks outnumbered advancing ones on the NYSE by 1,723 to 1,273, while on the Nasdaq, decliners beat advancers 1,586 to 925.

(Reporting By Chuck Mikolajczak, additional reporting by Doris Frankel and Rodrigo Campos; Editing by Kenneth Barry)

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The three had been identified by an investigative panel, commissioned by the company, as the main culprits in the fraud, seeking to delay the reckoning from risky investments that Olympus, like many Japanese companies, made in the late-1980′s bubble economy.

Tokyo prosecutors arrested ex-President Tsuyoshi Kikukawa, former Executive Vice President Hisashi Mori and former auditor Hideo Yamada on suspicion of violating the Financial Instruments and Exchange Law, officials said in a statement.

Also arrested were four others, including former bankers Akio Nakagawa and Nobumasa Yokoo, suspected of helping the executives hide huge investment losses through complex MA deals.

The arrests come as investors focus on who will run the once-proud company when its management steps down at an April 20 shareholders meeting, and whether Olympus will seek a capital tie-up to fix its balance sheet.

Olympus is banking on that April meeting marking a turning point in the scandal, with at least six of its 11-member board, including President Shuichi Takayama, set to resign.

His successor is likely to be one of three board members the panel said were not responsible for the cover-up – Masataka Suzuki, Kazuhiro Watanabe and Shinichi Nishigaki – said a source familiar with the matter, who did not want to be identified due to the sensitivity of the issue.

“The arrests of former executives won’t impact possible tie-ups with Terumo, Sony, Fujifilm and others,” said a sell-side equity manager at a Japanese firm, who did not want to be named as he is not authorized to talk to the media.

“Olympus continues to be very attractive to other companies because of its endoscope business.”

Last year, the investigative panel found Kikukawa, Mori and Yamada had played leading roles in a 13-year scheme to hide the losses, and they are among 19 executives Olympus is suing over the scandal.

The panel said it found no evidence of involvement by organized crime, despite speculation that “yakuza” gangsters were somehow involved in the cover-up scheme.

An Olympus spokesman said the company would cooperate fully with the investigative authorities. The company is also under investigation by law enforcement agencies in Japan, Britain and the United States.

Kikukawa’s condominium house was among 20 sites raided in December by prosecutors. Kikukawa, who took over as president in 2001, was reportedly aware of the details of the cover-up.

Nakagawa, who began his banking career at Nomura Securities, was a founding member of the Axes group, which was awarded a $687 million advisory fee for Olympus’ acquisition in 2008 of UK medical equipment firm Gyrus that was at the heart of the scandal.

Yokoo, another ex-Nomura banker, ran a consulting firm, Global Company, which was hired by Olympus in 2000 to scout for new businesses and steered investment into three small money-losing Japanese firms.

The scandal was exposed last October by then-chief executive Michael Woodford, a rare foreign CEO in Japan, who was sacked by the Olympus board after questioning dubious MA deals that were later found to have been used to conceal the losses.

The affair also fanned concerns about lax corporate governance in Japan generally.

Olympus in December filed five years’ worth of corrected financial statements plus overdue first-half results, revealing a $1.1 billion dent in its balance sheet, triggering talk it would need to merge or forge a business tie-up to raise capital.

On Monday, it forecast a $410 million full-year loss due largely to its ailing camera operations, but its core endoscope business appeared unscathed by the scandal, and its president said the firm might not need outside capital.

Olympus shares were down 1.8 percent at 1,280 yen on Thursday in a flat overall market.

($1 = 78.3350 Japanese yen)

(Additional reporting by Mari Saito, Writing by Linda Sieg and Chris Gallagher, Editing by Ian Geoghegan)

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Tokyo’s benchmark Nikkei 225 index shed 0.2 percent to 9,238.63 and Hong Kong’s Hang Seng was off 0.8 percent at 21,194.4. Seoul’s Kospi fell 1.1 percent to 2,002.60.

Global markets rose briefly Wednesday on news China would keep investing in Europe and Greece would fulfill obligations imposed by its creditors. But those hopes waned after a European official warned Greece’s assurances might be inadequate, possibly jeopardizing the latest infusion of money from its European partners.

Asian investors were put off by the lack of a clear outcome over Greece.

“The uncertainty upset the market, especially last night in New York,” said Francis Lun, managing director of Lyncean Securities in Hong Kong. “I think people are resigned to the fact that Greece really is a lost cause. It doesn’t make sense to throw good money after bad.”

China’s Shanghai Composite Index lost 0.8 percent to 2,361.0. Taipei’s Taiex was down 0.3 percent at 7,977.08 and Sydney’s SP ASX 200 shed 1.6 percent to 4,183.5. Singapore’s benchmark declined 0.7 percent to 2,989.47.

Asian traders have been disappointed by Beijing’s failure to take more aggressive steps to boost slowing growth by easing credit and investment curbs imposed earlier to fight inflation and surging housing costs, Lun said.

“Of course the play is now for the Chinese government to increase liquidity and relax controls on the property market. But that hasn’t happened,” Lun said.

China’s central bank governor on Wednesday expressed confidence in Europe, his country’s biggest trading partner, and said Beijing will keep buying European government debt.

Chinese leaders have repeatedly expressed sympathy and support for Europe but have made no financial commitments. European leaders are hoping Beijing will contribute to a bailout fund from its $3.2 trillion in foreign reserves.

Greece’s creditors want Athens to make up a euro325 million ($425 million) funding gap and present written guarantees the governing coalition’s party leaders will carry out the plan if they come to power. European governments worry that after elections expected in April, Greek politicians might renege on austerity measures due to public opposition.

Some analysts have called for an “orderly default,” letting Greece eliminate most or all of its debts, others have warned repercussions could be severe, damaging confidence in other European governments.

For weeks, many analysts have wondered if the bailout loans would be enough given the size of Greece’s debts. Now, there is speculation they may not come in time anyway. Greece has a chunk of loans coming due in March.

Britain’s FTSE shed 0.1 percent on Wednesday, while benchmarks in France and Germany both rose 0.4 percent.

Wall Street also fell on anxiety over Greece. The Dow Jones industrial average suffered its biggest one-day decline this year, falling 97.33 points to 12,780.95.

The Standard Poor’s 500 lost 7.27 points to 1,343.23, while the Nasdaq composite index fell 16 points to 2,915.83.

On currency markets, the dollar fell to 78.39 yen while the euro held steady at $1.303.

Benchmark crude was down 27 cents to $101.53 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.06 to settle at $101.80 per barrel in New York on Wednesday. Brent crude was steady at $118.93 per barrel in London.

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