(Reuters) - A new clash over the European Central Bank and political turmoil in Italy kept the euro zone on edge on Tuesday on the eve of a summit meant to confront the currency bloc's worsening sovereign debt crisis. Just 24 hours before European leaders are due to adopt a plan to reduce Greece's debt burden, fortify European banks to withstand bond losses, and scale up the euro zone rescue fund to prevent market contagion, disputes raged in Rome and Berlin.

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(Reuters) - Consumer confidence unexpectedly dropped in October to its lowest level in two-and-a-half years, while housing prices were unchanged at anemic levels in August, data showed on Tuesday. Brighter-than-expected manufacturing and jobs data in recent weeks had tempered fears the economy could lapse back into recession, with most expecting a slow pace of growth that should avoid contraction, but the surprising drop in consumer confidence suggests the improvement in third quarter economic growth may not be sustained.

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(Reuters) - United Parcel Service reported a higher quarterly profit as increased pricing, cost cutting and technology improvements helped compensate for domestic shipping volume dulled by a sluggish economy, and it affirmed its outlook for record 2011 results. The company's shares slid more than 2 percent in midday trading, giving back some of a more than 15 percent rally from this month's lows, with the pace of consumer holiday demand still in question.

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(Reuters) - The International Monetary Fund is considering taking part in a special investment vehicle being proposed by the euro zone bailout fund but has not made a decision yet, euro zone officials said on Tuesday. "The IMF has indicated that they are considering it -- they have not taken a position," one euro zone official said. "It will all depend on the whole package."

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(Reuters) - Stocks rose on Monday adding to three weeks of gains for the S&P after strong earnings from Caterpillar and a number of proposed acquisitions boosted investor appetite for risky assets. Caterpillar Inc (CAT.N) jumped 4.5 percent to $91.38 after the heavy equipment maker reported a quarterly profit that topped estimates on record revenues.

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(Reuters) - Caterpillar Inc far exceeded analyst expectations on Monday, reporting a 44 percent quarterly earnings increase due to record revenue, and the company signaled tempered optimism in its 2012 outlook. The Peoria, Illinois, company said it expects full-year 2011 profit and revenue to be at the top end of its previous outlook range due to strong demand. In 2012, the company expects revenue to increase 10 percent to 20 percent above the $58 billion in sales it expects this year, although it continues to make contingency plans for a potential downturn.

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(Reuters) - The European Union is now discussing two options for giving the euro zone rescue fund more firepower -- an insurance model and a special investment vehicle (SPIV), a paper obtained by Reuters on Monday showed. The two options could be twinned and would not require a change to the current framework of the European Financial Stability Facility (EFSF), the paper said.

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(Reuters) - New York Federal Reserve President William Dudley said on Monday the U.S. economy still faces serious headwinds, including "spillover" effects from Europe, adding the central bank will continue to do everything within its power to help. Europe's sovereign debt crisis has weakened the outlook for global growth and with it, U.S. exports, Dudley said in a speech to Fordham University's Gabelli School of Business.

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(Reuters) - Oracle Corp (ORCL.O) struck a deal to buy RightNow Technologies Inc (RNOW.O) for around $1.5 billion, agreeing to pay a nearly 20 percent premium for the cloud-based customer service company. RightNow's shares rose 19 percent in premarket trading.

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(Reuters) - Stocks rose to their highest levels in more than two months on Friday in anticipation of a weekend European Union debt-crisis summit that could potentially remove a major cloud from markets. Hurdles remain to resolving the crisis, and important differences still separate major players France and Germany, but investors apparently took it as a positive that their leaders have set a target date of Wednesday for reaching a solution.

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