SHANGHAI/NEW YORK (Reuters) - Chinese Internet entrepreneur Jack Ma is buying back up to half of a 40 percent stake in his Alibaba Group from Yahoo Inc for $7.1 billion, in a deal that moves the Chinese e-commerce leader closer to a public listing. Under the agreement, Yahoo will sell half its stake in Alibaba for at least $6.3 billion in cash and up to $800 million in new Alibaba preferred stock. ...

BERLIN (Reuters) - Chancellor Angela Merkel will discuss with the leaders of German political parties on Thursday the prospects for a European fiscal pact she wants parliament to approve before its summer recess despite opposition foot-dragging. Government spokesman Georg Streiter said Merkel, Finance Minister Wolfgang Schaeuble and other senior officials would meet the national and parliamentary leaders of the main parties on Thursday from 3 p.m. to 5 p.m. (1300-1500 GMT). The subject would be "the fiscal pact, Europe and everything linked to that", Streiter told a news conference. ...

LONDON (Reuters) - The euro steadied against the dollar on Monday, rising above last week's four-month low as some investors took profit on recent bearish bets, although concerns about financial turmoil in Greece and Spain kept the common currency vulnerable. Speculators who had piled up a record amount of bets against the euro cut some of those positions, giving it a respite from this month's relentless selling. The euro was steady at $1.2773, well above Friday's low of $1.2642 hit on trading platform EBS. A break below the nearby 2012 low of $1. ...

ROME (Reuters) - Italy is likely to register a strong protest vote against belt-tightening on Monday in local elections that will provide a fresh snapshot of Europe's changing political landscape a year ahead of a national ballot. Taking place against the backdrop of a tense and somber national mood, the second round of voting to choose city majors involves nearly 120 local administrations. Prime Minister Mario Monti - the architect of Italy's tough austerity program - is not standing, but the two main parties in the right-left coalition that support him are. ...

A Chinese conglomerate announced Monday it will buy a major U.S. cinema chain, AMC Entertainment Holdings, for $2.6 billion in China's biggest takeover of an American company to date.

CHICAGO (Reuters) - NATO will hand over the lead role in combat operations to Afghan forces across the country by mid-2013, alliance leaders said on Sunday as they charted a path out of a war that has lost public support and strained budgets in Western nations. A NATO summit in Chicago on Monday will formally endorse a U.S.-backed strategy for a gradual exit from Afghanistan, a move aimed at holding together an allied force scrambling to cope with France's decision to withdraw its troops early. ...

NEW YORK (Reuters) - Barely a day went by at the insider-trading trial of multimillionaire hedge-fund founder Raj Rajaratnam a year ago without mention of Rajat Gupta, a boldface name in business and charity circles. On Monday in the same federal court in New York, it will be Gupta's turn to go on trial. The former Goldman Sachs Group Inc and Procter & Gamble board member is accused of leaking stock secrets to Rajaratnam, his erstwhile friend and business associate who was convicted and is now in prison. ...

BRUSSELS (Reuters) - The European Union's antitrust chief on Monday offered Google a chance to settle an investigation into allegations of anti-competitive behavior after the world's most popular search engine indicated its willingness to resolve the issue amicably. The European Commission launched investigation into Google in November 2010 after rivals, including Microsoft, accused the company of manipulating search results and promoting its own advertising services while demoting their rivals'. ...

LONDON (Reuters) - British bank Barclays said it is to sell its 19.6 percent holding in U.S. asset manager BlackRock, worth $6.1 billion and which it has held for almost three years. Tougher global regulations mean banks have to hold more capital against their stakes in asset managers and other firms, making it less profitable. Barclays Chief Executive Bob Diamond is attempting to get the bank's return on equity back above 13 percent, by selling or shutting businesses or investments that do not stack up. ...

LILLE, France (Reuters) - French prosecutors said on Monday they had opened an inquiry into allegations of group rape by Dominique Strauss-Kahn and three friends, as part of an investigation into his ties to a suspected prostitution ring in the northern city of Lille. The former IMF chief is under formal investigation over whether he was aware he was dealing with prostitutes and pimps when attending sex parties in Lille, Paris and Washington in 2010 and 2011 that were organized by business acquaintances. ...

LILLE, France (Reuters) - French prosecutors said on Monday they had opened an inquiry into allegations of group rape by Dominique Strauss-Kahn and three friends, as part of an investigation into his ties to a suspected prostitution ring in the northern city of Lille. The former IMF chief is under formal investigation over whether he was aware he was dealing with prostitutes and pimps when attending sex parties in Lille, Paris and Washington in 2010 and 2011 that were organized by business acquaintances. ...

BAGHDAD (Reuters) - Iraq is buying unmanned drones from the United States to help protect its southern oil platforms as the OPEC nation ramps up production after the withdrawal of the last American troops, U.S. and Iraqi officials said on Monday. Protecting the vital infrastructure around its oil reserves, the world's fourth largest, is crucial as Iraq rebuilds an industry battered by years of war and sanctions against former dictator Saddam Hussein. "Iraq's navy has purchased U.S. ...

SHANGHAI/NEW YORK (Reuters) - Chinese Internet entrepreneur Jack Ma is buying back up to half of a 40 percent stake in his Alibaba Group from Yahoo Inc for $7.1 billion, in a deal that moves the Chinese e-commerce leader closer to a public listing. Under the agreement, Yahoo will sell half its stake in Alibaba for at least $6.3 billion in cash and up to $800 million in new Alibaba preferred stock. ...

A Chinese conglomerate announced Monday it will buy a major U.S. cinema chain, AMC Entertainment Holdings, for $2.6 billion in China's biggest corporate takeover in the United States to date.

MOSCOW (Reuters) - President Vladimir Putin named loyal allies to top posts in Russia's new government on Monday, taking a firm grip on economic policy and limiting Prime Minister Dmitry Medvedev's ability to push a reform agenda. Finance Minister Anton Siluanov remains and pro-Putin economist Andrei Belousov takes over as economy minister, while Igor Shuvalov keeps his post as first deputy prime minister in overall charge of economic policy. ...

TRIPOLI (Reuters) - The Libyan convicted of the 1988 bombing of a PanAm flight over Lockerbie will be buried on Monday in a quiet ceremony that Libyans hope will allow them to leave behind the controversy that surrounded him in life. Abdel Basset al-Megrahi, who always said he was not responsible for bringing down the jumbo jet on the Scottish town and killing 270 people, died in his bed in Tripoli on Sunday surrounded by family. His release from jail in 2009 caused huge controversy in Britain and the United States, where most of the victims were from. ...

European stocks inched up Monday morning in spite of investors' lingering concerns that the G-8 leaders had failed to provide a concrete plan to solve the European debt crisis.

NEW YORK (Reuters) - Newly issued shares in Facebook Inc may have a hard time in the coming week if lead underwriter Morgan Stanley stops supporting the stock and managers lower down in the IPO book who were hoping for an early surge decide to get out before going underwater. Facebook on Friday sold 421 million shares of stock in a deal that valued the company at more than $100 billion. But investors, expecting a first-day pop in price, instead saw it close just 0.6 percent above the IPO price at $38.23. ...

A German official made clear on Monday that Berlin continues to oppose the idea of jointly-issued bonds for the 17-nation eurozone, which France's new president had suggested could be used to create much-needed economic growth and ease the region's financial crisis.

VIENNA/DUBAI (Reuters) - The U.N. nuclear watchdog chief began rare talks in Tehran on Monday after voicing hope for a deal to investigate suspected atomic bomb research - a gesture Iran might make to try to get international sanctions relaxed and deflect threats of war. International Atomic Energy Agency Director-General Yukiya Amano met the head of Iran's nuclear energy organization, Fereydoun Abbasi-Davani, hours after his pre-dawn arrival, according to ISNA news agency. ...

VIENNA/DUBAI (Reuters) - The U.N. nuclear watchdog chief began rare talks in Tehran on Monday after voicing hope for a deal to investigate suspected atomic bomb research - a gesture Iran might make to try to get international sanctions relaxed and deflect threats of war. International Atomic Energy Agency Director-General Yukiya Amano met the head of Iran's nuclear energy organization, Fereydoun Abbasi-Davani, hours after his pre-dawn arrival, according to ISNA news agency. ...

Street battles between pro- and anti-Syrian groups in the Lebanese capital killed two people overnight and wounded 15 as the spiraling conflict in neighboring Syria spilled across the border.