(Reuters) - The European Central Bank raised interest rates for the first time since the 2008 financial crisis on Thursday but signaled it was not necessarily the start of a series of similar steps. ECB President Jean-Claude Trichet used phrasing at a news conference traditionally seen as associated with further swift hikes. But he stressed that the bank had not taken Thursday's decision as the first in a series of moves.

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(Reuters) - President Barack Obama and leaders in Congress will attempt to reach a spending-cut deal on Thursday that would avert a dangerous government shutdown at week's end. Mindful of a midnight Friday deadline when temporary government funding runs out, Obama called on negotiators to work around the clock to iron out "relatively narrow differences" between Democrats and Republicans over the level of federal spending between now and September 30.

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(Reuters) - Large financial firms should be allowed to fail or they will continue to take excess risks that lead to crises, Richmond Federal Reserve President Jeffrey Lacker said on Thursday. Lacker said a very proactive response to the financial crisis, while stabilizing the situation in the short-term, has simply expanded the government's implicit safety net to nearly two-thirds of the financial system.

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(Reuters) - Spain vowed on Thursday it would not follow ailing neighbor Portugal in seeking a European bailout, and a successful Spanish bond auction suggested markets do not immediately fear contagion. The fall of another euro zone domino after Greece and Ireland focused attention on Madrid and the efforts that its government, and European authorities, have poured into erecting a firewall to buttress its public finances.

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(Reuters) - The European Commission expects a formal request from Portugal for aid "soon" and a deal will probably be agreed to ease its debt crisis before a new government is elected on June 5, officials said on Thursday. An EU source said Prime Minister Jose Socrates' caretaker cabinet still had to clear up that it had the political authority to sign up to a deal that is likely to include painful budget cutbacks.

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(Reuters) - Billionaire hedge fund manager John Paulson is off to a mixed start to the year as his biggest portfolios posted losses during the first three months, two people familiar with the performance said. Some of his other funds, however posted gains, the people, who are not permitted to speak about the hedge fund firm's performance publicly, said on Thursday.

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(Reuters) - Brent crude futures dipped on Thursday after five days of gains, hovering around $122 a barrel on concerns that strong prices could crimp demand, with the European Central Bank lifting rates to control inflation. Brent crude shed 28 cents to $122.02 a barrel by 1157 GMT. It hit a 2-1/2-year high above $123 on Wednesday, driven by violence in the Middle East.

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(Reuters) - The S&P 500 wavered near a seven-week high on low volume on Wednesday as investors refrained from making big bets before the start of earnings season next week provides the next catalyst for stocks. Signs of a strengthening economy plus merger and acquisition activity have pushed the S&P 500 close to 1,344, the highest level since June 2008. A meaningful breach of that level could lead to a stocks breakout, pushing prices higher.

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(Reuters) - Congressional negotiators on Wednesday raced against a looming deadline to craft a budget deal that would cut billions of dollars in spending and keep the government operating beyond Friday. With time running short, Republican and Democratic negotiators struggled to hammer out a compromise before midnight on Friday to avert a federal government shutdown the White House said would idle more than 800,000 workers.

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(Reuters) - Dish Network Corp won Blockbuster Inc in a bankruptcy auction for about $320 million, boosting the satellite TV provider's online features and marketing reach. Dish, the second-largest U.S. satellite TV company after DirecTV, trumped at least three other bidders, including activist investor Carl Icahn, for the one-time leader in video rentals.

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