(Reuters) - Top U.S. retailers reported better-than-expected sales gains for June after smartly targeted bargains lured shoppers contending with a wobbly economy. Retailers such as Macy's Inc, Costco Wholesale Corp, Target Corp and Gap Inc all beat Wall Street estimates, suggesting stores have grown savvier in how to offer discounts without compromising sales numbers.

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(Reuters) - UBS AG's admission that it may not reach profit goals and that new regulation has changed the game in investment banking is likely to fuel further doubts over its ambitions in fixed income, where it still trails rivals. Calls to scale back or even scrap the business, which will consume more capital under new industry rules, have dogged the Swiss bank for much of this year, with some analysts forecasting an "inevitable" restructuring of the investment bank.

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(Reuters) - Stocks fell slightly on Wednesday after a downgrade of Portugal's credit rating, China's interest rate rise and a soft report on the U.S. services sector sparked jitters about global growth prospects. The downgrading of Portugal's credit rating to "junk" by Moody's shocked financial markets and cast new doubt on European efforts to rescue distressed euro zone states without debt restructuring.

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(Reuters) - China raised interest rates for the third time this year on Wednesday, making clear that taming inflation remains a top priority even as the growth pace of its vast economy gently eases. The 25-basis-point increase in lending and deposit rates underscored China's quiet confidence that the world's second-biggest economy is resilient enough to endure tighter monetary policy and is not threatened by the hard landing that some investors fear.

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(Reuters) - European politicians accused credit rating agencies on Wednesday of anti-European bias after Moody's downgrade of Portugal's debt to "junk" cast new doubt on EU efforts to rescue distressed euro zone states without debt restructuring. European Commission President Jose Manuel Barroso said the decision to cut Lisbon's rating by four notches so soon after it became the third country to receive an EU/IMF bailout was fuelling speculation in financial markets.

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(Reuters) - International Monetary Fund Managing Director Christine Lagarde said on Wednesday the global economy was rebounding from the financial crisis but recovery remains unbalanced. "When we look at our growth forecasts for 2011, 2012, we are clearly on the rebound and things are improving and are getting better when compared with the situation as it was in 2009 at the height of the crisis," she said at her first press conference as the new IMF chief.

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(Reuters) - The pace of growth in the U.S. services sector dipped modestly in June, while prices paid fell sharply to its lowest level since August 2010, according to an industry report released on Wednesday. The Institute for Supply Management said its services index fell to 53.3 last month from 54.6 in May. The reading fell shy of economists' forecasts for 54.0, according to a Reuters survey.

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(Reuters) - Prime Minister David Cameron promised an inquiry on Wednesday into a "disgusting" phone hacking scandal at Rupert Murdoch's News International that has outraged Britain and cast a shadow over the mogul's plans to buy control of broadcaster BSkyB. Britons, he told parliament, had been "revolted" by the affair, in which tabloid journalists from the News of the World were said to have tapped into the mobile voicemails of crime victims, including an abducted schoolgirl later found murdered.

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(Reuters) - Purchase applications for U.S. home mortgages rose last week, but refinancing activity plunged as interest rates jumped, an industry group said on Wednesday. Overall, the seasonally adjusted index of mortgage application activity fell 5.2 percent last week, the Mortgage Bankers Association said. The index includes both refinancing and home purchase demand.

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(Reuters) - Banks and other large financial companies that could be seized and liquidated by the U.S. government are balking at a proposed plan they argue gives regulators too much power to snatch back executives' pay if their institutions fail. The plan is part of a broader proposal first issued earlier this year. A final rule is expected to be adopted on Wednesday by the Federal Deposit Insurance Corp.

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