UBS $2 billion rogue trade suspect held in London (Reuters)

LONDON/ZURICH (Reuters) – Swiss bank UBS said a trader who had lost it around $2 billion in unauthorized deals had been arrested in London, where police were holding 31-year-old Kweku Adoboli.

Adoboli -- working as a director of exchange traded funds and Delta 1 trading, according to his profile on networking site LinkedIn -- was arrested during the night at UBS's London office on suspicion of fraud, sources close to the situation told Reuters.

UBS said it discovered the problem on Wednesday afternoon, and police said they had launched an investigation.

"The man was taken to a City of London police station for questioning and he remains in custody while officers are continuing to investigate this matter," City of London police Commander Ian Dyson told reporters.

The University of Nottingham computer science and management graduate was described by a former landlord as a good tenant of a 1,000 pound ($1,600) per week apartment close to UBS in London's East End, where he lived until recently.

"I can confirm that an employee of the bank was arrested in London in connection with the statement," a UBS spokesman said, after the bank had revealed the loss.

UBS shares closed down 10.8 percent after it said it might post a third-quarter loss following the rogue trades, a huge blow as it struggles to rebuild its credibility after years of crises.

The loss effectively cancels out the 2 billion Swiss franc ($2.3 billion) saving the bank had hoped to make in a cost-cutting program announced last month in which it will axe 3,500 jobs.

It also threatens the future of UBS's investment bank, which is being reviewed by chief executive Oswald Gruebel as part of a wide-ranging restructuring following heavy losses in the credit crisis and a damaging scandal over bankers helping rich U.S. clients dodge taxes.

UBS, which said no client positions were affected, is scheduled to hold an investor day on November 17 at which it was expected to announce major restructuring of the investment bank.

"The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of $2 billion," the bank said in a statement.

UBS employed almost 18,000 people in its investment bank at the end of June, most of them outside Switzerland, particularly in London and the United States.

"(This) is a staggering demonstration that all the clever systems that the banks now have, especially after the financial crisis, still cannot stop a determined individual getting round them if they want to," said Chris Roebuck, Visiting Professor at Cass Business School in London.

"It will yet again confirm to the majority of shareholders who are Swiss that investment banking is not 'proper' banking, as private banking is."

UBS had started to see client confidence return this year after it had to be rescued by the Swiss state in 2008 following massive losses on toxic assets held by its investment bank. The bank has had a history of major risk management glitches followed by repeated pledges to fix risk systems.

KERVIEL

Any losses in UBS's investment bank risk scaring rich clients and prompting a further flight from its huge private bank, the core of its business that used to be the world's biggest wealth manager but has slipped to third place.

"This loss has the scope to have a material impact on the perception of UBS's private bank, impacting its future operating trends," Goldman Sachs analysts Jernei Omahen and Peter Skoog said in a note.

"Today's announcement therefore adds to the long list of arguments (and pressure) for a substantially smaller investment bank."

UBS's news caused disbelief among market operators.

The last similar case was when Jerome Kerviel, then a trader at Societe Generale, racked up a $6.7 billion loss in unauthorized deals revealed in 2008. Kerviel was sentenced to three years in prison in October 2010.

Both Kerviel and Adoboli were the same age when the scandal broke and both worked with so-called Delta 1 products, derivatives which closely track the underlying securities and give the holder an easy way to gain exposure to several asset classes. Examples include equity swaps, forwards, futures and exchange-traded funds.

"It is amazing that this is still possible," said ZKB trading analyst Claude Zehnder. "They obviously have a problem with risk management. Even when the amount isn't so high, it is once more a loss of confidence that casts UBS in a poor light."

"With this they are losing a lot of credit that they had regained with effort," he added.

Switzerland's financial markets regulator FINMA said it had been informed of the case and was in close contact with UBS.

HEADS TO ROLL?

The bank has in the past two years tried to rebuild the investment bank that nearly felled it during the financial crisis. It needed a state bailout after heavy losses on U.S. subprime mortgage-related securities.

Under Gruebel and investment bank boss Carsten Kengeter -- themselves both once traders -- it hired hundreds of traders in a bid to boost its bond business.

Several analysts said the incident made it more likely Kengeter would be in the firing line, while Gruebel could step down sooner rather than later.

"Gruebel saved the bank from destruction, so his main job is done. It is only a matter of time before he steps down. If it means he leaves a little sooner, it does not change a lot. But the investment bank is a bit of a disaster, and the knives will be out for Kengeter," said Peter Thorne, analyst at Helvea.

Another analyst who declined to be named said: "Some important heads are going to have to roll, and some are saying that after a series of missteps with the IB, Kengeter himself will have to go."

Former Bundesbank head Axel Weber is due to join the UBS board in May and take over as chairman in 2013.

The weak performance of the investment bank and tough capital rules in Switzerland had already attracted intense scrutiny over how UBS will cope, with analysts calling for a retrenchment of the investment bank.

The rogue trader scandal came as Swiss politicians were debating tough new capital rules designed to make sure big banks can weather future crises without having to be bailed out by the state.

"It shows that investment banking is a risky business and that it is important that systemically relevant functions are clearly separated from the rest of the banking business," Caspar Baader, parliamentary leader of the right-wing Swiss People's Party, told Swiss television.

($1 = 0.870 Swiss franc)

(Additional reporting by Andrew Thompson in Zurich, and Sarah White, Steve Slater, Keith Weir, Stefano Ambrogi and Douwe Miedema in London; Writing by Sophie Walker and Alexander Smith; Editing by Dan Lalor and Will Waterman)

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Violence escalates in London (Reuters)

LONDON (Reuters) – Riots spread to new areas of London Monday in a third night of violence as hooded youths torched cars and buildings, hurled missiles at police and looted shops, in the worst unrest in the British capital for decades.

Police were out in force, but struggled to stop disturbances spreading to Hackney in east London, close to the site of next year's Olympics games, and Peckham and Lewisham in south London.

Flames leaped into the air from a building in Peckham and cars were set on fire in several areas of London as gangs of youths roamed the streets.

The disturbances started late Saturday in London's northern Tottenham district when a peaceful protest over the police's shooting of a suspect turned violent, leaving parts of the high street charred and its shops looted.

Home Secretary Theresa May, who cut short her holiday to take charge of the government response to the riots, said arrests had climbed to 215 and 27 people had been charged.

"The violence we've seen, the looting we've seen, the thuggery we've seen, this is sheer criminality ... These people will be brought to justice. They will be made to face the consequences of their actions," she said.

The mayhem has so far been centered mainly in multi-ethnic, poorer parts of London, only a few miles from the Olympic park that will welcome millions of visitors in less than a year.

A Reuters witness described chaotic scenes in Hackney in which at least one vehicle had been set alight, as well as many rubbish bins.

Youths threw what appeared to be fireworks at the police, while officers in formation sporadically charged the youths to try and disperse the crowd.

At the confrontation in Hackney continued, violence flared in the south London areas of Lewisham and Peckham, with many using the micro-blogging website Twitter to post links to pictures of youths smashing shop windows.

LOCKDOWN

Some Twitter users said their area was in "lockdown" as police tried to reclaim the streets, while others said they were rushing home to safeguard their property.

Police said a double decker bus had been set alight in Peckham. In Hackney, youths, some in hooded tops, broke shop windows, including that of a Ladbrokes betting shop.

The BBC said the Hackney clashes broke out after police stopped and searched a man.

"We had boarded the whole place up, but they broke down the door and smashed up the place. They threw a bottle at me and it hit my leg," said the owner of a petrol station in Hackney, blood pouring from this leg.

British government officials branded rioters who fought police, looted shops and set fire to buildings as opportunistic criminals and said the violence, the worst in London for years, would not affect preparations for next summer's Olympic Games.

Police Deputy Assistant Commissioner Steve Kavanagh said the force was putting more officers on the streets in Hackney and other areas Monday night.

"Let me make it clear that people who are using current events as an excuse or cover to break the law, steal, attack police officers and cause fear to Londoners will not be tolerated by the vast majority of Londoners and us," he said.

"Our investigation, which is massive in scope, is continuing," he said in statement.

BARRICADES

A small group of people said they had barricaded themselves inside the 110-year-old Hackney Empire theater to escape the violence.

"We are stuck inside," said one person, who did not give her name, in a telephone conversation with Reuters.

"We don't want to be near the windows. They seem to be targeting shops at the moment. It's very scary."

"We are in the back of the building, staying away from the front. We have barricaded the doors and put chains on the doors."

Youths appeared to have used a free message service on Blackberry mobile phones to coordinate attacks on shops and police.

Research In Motion, the Canadian manufacturer of Blackberry smartphones, said it would work with British authorities, but gave no details on what information, if any, it would give the police.

"We feel for those impacted by this weekend's riots in London. We have engaged with the authorities to assist in any way we can," RIM spokesman Patrick Spence said in a statement.

Some have branded the disturbances as a cry for help from impoverished areas reeling from the government's harsh austerity cuts to tackle a big budget deficit, with youth services and other facilities cut back sharply.

"Tottenham is a deprived area. Unemployment is very, very high ... they are frustrated," said Uzodinma Wigwe, 49, who was made redundant from his job as a cleaner recently.

Officials said there was no excuse.

"It was needless, opportunistic theft and violence, nothing more, nothing less. It is completely unacceptable," said Deputy Prime Minister Nick Clegg.

(Additional reporting by Adrian Croft, Mohammed Abbas and Avril Ormsby; Editing by Myra MacDonald)

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London police chief quits over hacking ties (AP)

LONDON – London's police chief has quit over his links to a former News of the World editor caught up in the phone hacking scandal.

Metropolitan Police commissioner Paul Stephenson denies any wrongdoing.

Stephenson has been criticized for hiring Neil Wallis, a former News of the World executive editor arrested last week in the scandal, as a part-time PR consultant for a year until September 2010.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

LONDON (AP) — London's police chief has quit over his links to a former News of the World editor caught up in the phone hacking scandal.

Metropolitan Police commissioner Paul Stephenson denies any wrongdoing.

Stephenson has been criticized for hiring Neil Wallis, a former News of the World executive editor arrested last week in the scandal, as a part-time PR consultant for a year until September 2010.

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Murdoch exits London home with arm around Brooks (Reuters)

LONDON (Reuters) – News Corp Chief Executive Rupert Murdoch exited his London home on Sunday with his arm around embattled newspaper chief Rebekah Brooks, and told Reuters that she was his first priority.

Murdoch, who flew into Britain earlier on Sunday to deal with an escalating phone-hacking scandal at his News of the World tabloid that Brooks used to edit, answered: "This one," gesturing at Brooks, when asked what his first priority was.

The two, both smiling, then went into the Stafford hotel opposite Murdoch's apartment in the upmarket Mayfair area of London.

(Reporting by Paul Sandle)

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Murdoch arrives in London brandishing last phone-hack paper (Reuters)

LONDON (Reuters) – Media baron Rupert Murdoch flew into London on Sunday to tackle a telephone-hacking scandal that has sent tremors through the British political establishment and may cost him a multi-billion dollar broadcasting deal.

Murdoch, 80, swept into his London headquarters in the front passenger seat of a red Range Rover car, holding up the last edition of the best selling newspaper, the News of the World, that he had closed hours earlier in a bid to contain the crisis.

Wearing a white panama-style hat, he ignored reporters massed at the entrance, focusing his attention on the newspaper he bought in 1969 as the cornerstone of a vast media empire. His car sped out of the complex again 15 minutes later but it was not clear what meetings he had planned

Best known for its lurid headlines exposing misadventures of the rich, royal and famous, the last News of the World said simply "Thank You & Goodbye" over a montage of some of its most celebrated splashes of the past 168 years. For admirers it had been a stock feature of lazy Sundays, for critics it had become a symbol of craven irresponsibility in the British media.

"All human life was here," the News of the World declared.

Murdoch had seemed on the point of clinching approval for a cherished prize, the buyout of broadcaster BSkyB, only last week; but revelations phone-hacking had extended beyond celebrities to relatives of a murdered girl, of victims of 2005 London bomb attacks and of soldiers killed in action stirred broad public anger.

Editor Colin Myler told media massed outside the newspaper's offices he deeply regretted the newspaper's closure.

"This is not where we wanted to be and it's not where we deserve to be, but as a final tribute to 7.5 million readers, this is for you and for the staff, thank you."

The scandal has raised questions about relations between politicians, including Prime Minister David Cameron -- who hired a former editor of the paper as his spin doctor -- and media barons such as News Corp chairman and chief executive Murdoch.

It has also brought to light accusations that journalists working for Murdoch and others illegally paid police for information. A senior police officer said the London police force had been 'very damaged' by its failure to press an initial investigation into telephone hacking at the News of the World.

Cameron's opponents have scented an opportunity in their efforts to block Murdoch's $14 billion bid for the 61 percent of the profitable pay-TV operator BSkyB that News Corp, the world's largest news conglomerate, does not already own.

Previously, those looking at whether Murdoch should get the go-ahead have focused on whether it would give him too much power over Britain's media.

But allegations that senior editors were involved in illegally accessing thousands of voicemail messages and paying police for information to get scoops have now prompted the regulator Ofcom to say it will consider whether News Corp directors are "fit and proper" persons to run BSkyB.

The government has received more than 135,000 public complaints against the BSkyB deal.

Cameron came under growing pressure on Sunday to halt Murdoch's bid for BSkyB, at least until an investigation into phone-hacking had been completed.

Labour opposition leader Ed Miliband said he would force the issue to a parliamentary vote this week if Cameron failed to act.

"He needs to make clear that BSkyB cannot go ahead until the investigation is complete," Miliband told the BBC's Andrew Marr program.

Pressure came too from members of the government's junior coalition partner, the Liberal Democrats, who have traditionally had a less cozy relationship with Murdoch. Deputy LibDem leader Simon Hughes said he would be prepared to back Labour's call for the deal to be postponed and urged other LibDems to do the same -- setting the stage for a major test of the coalition's unity

"LET DOWN"

"We've been let down by people that we trusted, with the result the paper let down its readers," the News Corp chief executive said as he left a media conference in Idaho.

News Corp shares fell more than 5 percent in New York last week.

Neither Cameron's office nor the Department for Culture, Media and Sport plan to speak to him during the visit, spokespeople said. Police declined to comment on whether they would try to speak to him.

The prime minister's close links with those at the heart of the scandal mean he too has been damaged by it but analysts say that, with probably nearly four years until a parliamentary election, he is unlikely to be sunk by it.

Cameron, a friend of former News of the World editor Rebekah Brooks, joined calls for her to step down as chief executive of News Corp's News International arm at a news conference on Friday where he admitted politicians had been in thrall to media for years, and ordered a public inquiry.

British police on Friday arrested Andy Coulson, the former spokesman for Cameron who had resigned as News of the World editor in 2007 after one of his reporters and a private investigator were convicted of hacking the phones of aides to the royal family. Coulson has also said he knew nothing about the phone hacking.

"HACKING WAS STANDARD PRACTICE"

A senior police officer told the Sunday Telegraph that voicemail hacking had been "standard practice" at the News of the World and that its executives had failed to cooperate fully with police during an investigation in 2005-06.

He said the new investigation had been prompted by "material that was completely available to them in 2005-06."

"It makes their assurances in 2005-06 look very shaky."

The Sunday Times said at least nine journalists and three police officers were facing jail in connection with the hacking scandal and quoted senior police officers as saying it was likely there would be further arrests soon.

Murdoch said on Saturday that Brooks, who was editor of the News of the World at a time when many of the alleged hacking incidents were taking place, had his "total" support. She denies knowing of the practice during her watch.

"I'm not throwing innocent people under the bus," he said.

Asked if he planned any management changes, for example in the responsibilities of his son and heir apparent James, he said "No." "Nothing's changed," he told reporters.

Some 200 people at the News of the World are losing their jobs.

At London Bridge railway station, copies of the last edition were selling well, said newspaper vendor Jean Natella.

"I think it's a shame because they've done a lot of good, they've riddled out a lot of, lets say, nasty people," she said. "It's unfortunate that a few people have brought it down. But they have got no choice because they condemned others so they have got to show they are accountable."

Others were less charitable.

"The specter of the old Murdoch, the one whose demise was signaled last week -- powerful, voracious and threatening -- must not be allowed to rise again from the ashes of the News of the World," said an editorial in The Observer, a rival weekly.

The Guardian newspaper said on Saturday police were investigating claims a News International executive may have deleted millions of emails from an internal archive in an attempt to hamper investigations. A News International spokeswoman said the allegation was "rubbish."

"We are cooperating actively with police and have not destroyed evidence."

Cameron fleshed out on Sunday how inquiries into the scandal, announced on Friday, would work.

The first, a judge-led inquiry to be held in public, will cover phone hacking and criminal activity and look at the way the police investigated allegations against the News of the World, and the relationship between newspapers and the police.

The second inquiry will be asked to recommend a new framework for press regulation.

(Writing by Ralph Boulton)

(Additional reporting by Olesya Dmitracova, Jodie Ginsberg, Christina Fincher, Sarah McBride, Sudip Kar-Gupta; Writing by Alison Williams; Editing by Kevin Liffey and Janet Lawrence)

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Murdoch flies to London to tackle phone-hack crisis (Reuters)

LONDON (Reuters) – Rupert Murdoch was expected to fly to London to tackle a scandal engulfing his media empire while journalists prepared the last edition of a best-selling weekly they say he has sacrificed to protect plans to expand his television business.

The planned visit of the News Corp chief executive coincided with calls on Prime Minister David Cameron to speed up an inquiry into phone-hacking allegations which could jeopardize Murdoch's proposed takeover of a British broadcaster.

It has also unearthed allegations journalists working for Murdoch and others paid police for information and raised questions about relations between politicians, including Cameron, and powerful media owners like Murdoch.

Alan Rusbridger, editor of the left-leaning Guardian newspaper, said the past week had seen a whirlwind of stunning political, business and judicial developments.

"We've had both the prime minister and the leader of the opposition making the kind of statements that a week ago would have seemed suicidal for politicians, essentially conceding they had turned a blind eye to the abuse of press power because they wanted to keep in with Rupert Murdoch," he said in a video on the Guardian's web page.

News Corp, whose shares have fallen over the scandal, declined to comment on 80-year-old Murdoch's agenda.

A spokeswoman for News International, its British media arm, denied allegations an executive might have destroyed evidence relevant to a police inquiry into the allegations its reporters hacked into the telephones of relatives of troops killed in action and a string of celebrities several years ago.

News International chief Rebekah Brooks, 43, indicated more revelations may emerge in comments to News of the World staff on Friday, a day after she told them the 168-year-old newspaper had become "toxic" and would be shut.

"Eventually it will come out why things went wrong and who is responsible. That will be another very difficult moment in this company's history," Brooks said on Friday, according to a recording carried by Sky News.

Murdoch has brushed off calls for Brooks to resign due to her editorship of News of the World during some of the alleged hacking incidents.

She denies knowledge of the practice during her watch on the paper, hugely popular due to its celebrity gossip, campaigns and photos of scantily-clad young women.

Cameron, a friend and neighbor of Brooks, joined calls for her to step down on Friday at a news conference at which he admitted politicians had been in thrall to media for years and ordered a public inquiry.

Analyst Claire Enders said Newscorp was vulnerable. "As a business crisis it is immense," she told Reuters.

JOURNALISTS ANGRY

The Guardian newspaper said police were investigating evidence a News International executive may have deleted millions of emails from an internal archive in an apparent attempt to obstruct investigations.

The News International spokeswoman said the allegation was "rubbish," adding: "We are cooperating actively with police and have not destroyed evidence."

Journalists working on Sunday's last edition of the News of the World were angered by the loss of their jobs, saying they had been made scapegoats to protect NewsCorp's expansion in television.

"There are 280 journalists there who have absolutely nothing to do with the things that may have gone on many, many years in the past," chief subeditor Alan Edwards told the British Broadcasting Corporation.

A banner had been hung outside the newspaper's headquarters in east London, saying: "Break up the Murdoch Empire."

Neil Ashton, News of the World football correspondent told reporters before his final shift on the paper a lot of people on the paper wanted answers: "Rupert Murdoch is coming to London to restructure his company ... I don't know what the future holds."

Brooks denied the company, which many assume will fill the gap left by the News of the World by extending publication of its Sun daily to Sundays, was combining a cost-saving measure with a bid to remove a threat to its expansion in television.

British police on Friday arrested Andy Coulson, the former spokesman for Cameron who had resigned as News of the World editor in 2007 after one of his reporters and a private investigator were convicted of hacking into the phones of aides to the royal family.

Coulson has also said he knew nothing about the phone hacking.

PUBLIC INQUIRY

Cameron announced a full public inquiry into the hacking allegations at a hastily-convened news conference on Friday in which he was forced to defend his judgment in hiring Coulson.

The opposition Labour Party said on Saturday Cameron needed to appoint a judge quickly to get the inquiry going to avoid evidence disappearing, pointing to the Guardian reports.

"The clock runs out at the end of today," Labour Deputy Leader Harriet Harman told the BBC. "We ought to take precautionary measures."

A spokesman for Cameron said he was moving as quickly as possible. "We have already approached the Lord Chief Justice who will propose the judge," the spokesman said, adding that any destruction of evidence would be a criminal matter.

Cameron's opponents seek to block Murdoch's bid for the 61 percent of broadcaster BSkyB NewsCorp does not already own on the grounds it would give him too much political clout.

But allegations senior editors were involved in illegally accessing thousands of voicemail messages, and paying police for information, to get scoops, has raised questions about whether Murdoch's group is a "fit and proper" owner for BSkyB.

After years of allegations about hacking the voicemail of celebrities and politicians in search of stories, the scandal reached a tipping point earlier this week when it was alleged that in 2002 the paper had listened to the voicemail of Milly Dowler, a missing schoolgirl who was later found murdered, and even deleted some of her messages to make way for more.

That claim, and allegations that a growing list of victims included Britain's war dead and the families of those killed in the 2005 London transport bombings, outraged readers and caused many brands to pull advertising from the title.

A source familiar with his plans said Murdoch, who began his British media arm in the 1960s, was likely to arrive in London on Sunday morning.

Analysts and investors said the 14 billion dollar takeover deal could be jeopardized if British regulators impose tougher rules in response to new concerns around News Corp's dominance in British media.

Cameron indicated a new assertiveness toward the Murdoch empire by withholding overt endorsement of News Corp's bid for BSkyB on Friday.

"This scandal is not just about some journalists on one newspaper," he said. "It's not even just about the press. It's also about the police. And, yes, it's also about how politics works and politicians too."

News of the World and other newspapers have been accused of paying the police for information. Police said on Friday they had arrested a 63-year-old man in Surrey, southern England over allegations of inappropriate payments to police.

The prime minister's close links with those at the heart of the scandal mean he has been damaged by it but analysts say that with probably nearly four years until a parliamentary election he is unlikely to be sunk by it.

The police also face questions over why an initial investigation into phone hacking was closed after royal correspondent Clive Goodman and a private detective were jailed in 2007.

(Additional reporting by Sudip Kar-Gupta in London; writing by Philippa Fletcher; editing by Ralph Boulton)

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Fans gather for Harry Potter premiere in London (AP)

LONDON – Harry Potter's saga is ending, but his magic spell remains.

Thousands of fans from around the world massed in London Thursday for the premiere of the final film in the magical adventure series.

They thronged Trafalgar Square, where a soggy red carpet awaited the stars, and nearby Leicester Square, where the movie will be shown in a plush movie theater, braving the inevitable London rain with umbrellas, waterproofs and good cheer.

They came from around the world. Many had camped out overnight, some for days. Most were young adults who grew up with the boy wizard and his adventures, and could not pass up the chance to say goodbye.

"It's our childhood — we made friends because of Harry Potter," said Luis Guilherme, a 22-year-old graduate student from Sao Paolo, Brazil. "I don't know how my life would be without it. I would be less imaginative, for sure, and less adventurous. I would never be here in London.

"We'd never forgive ourselves if we didn't come, one last time."

"Harry Potter and the Deathly Hallows: Part 2" depicts Harry's final confrontation with the forces of evil Lord Voldemort — an epic showdown rendered, for the first time in the series, in 3D.

The eighth and last film in the made-in-Britain franchise was getting a lavish premiere, with huge screens and banners in Trafalgar Square and a nearby street transformed into the magical shopping thoroughfare Diagon Alley.

No one, however, could magic away the London rain.

"Every single time it's like this," said Zoey Lewis, 18. "Some people say the Death Eaters (Voldemort's followers) make it rain."

Lewis, a student from Brentwood, east of London, sheltered under an umbrella behind a handmade "We Love Helena" banner — her tribute to Helena Bonham Carter, who plays bad witch Bellatrix Lestrange in the movies.

"I love Harry Potter," she said. "It's been such a big part of my life. I don't know what I'll do without it."

The feeling is shared by he film's stars, who like many of their fans grew up with the series.

The central trio — Daniel Radcliffe, Emma Watson and Rupert Grint, cast as children and now in their early 20s — are due to walk the red carpet before the movie's premiere, along with a score of their co-stars.

Grint, who plays Harry's best friend Ron Weasley, said Wednesday he felt "a little bit lost" without the movies in his life. Watson said she'd miss playing plucky Hermione Granger, who was "like a sister."

Hours before the premiere, groups of girls screamed with excitement as they painted each others' faces in the red-and-yellow colors of Gryffindor, one of the four houses of the wizarding Hogwarts school in the Harry Potter books. Harry's house, of course.

A group of Mexican fans held aloft their national flag and a banner praising J.K. Rowling — the author who brought the bespectacled Harry and his world of wizards to life in seven books.

The premiere marks the end of an era that began when an unknown writer named J.K. Rowling published "Harry Potter and the Philosopher's Stone" in 1997. The book blossomed from well-reviewed children's tale to global phenomenon, launching a seven-book series that has sold 450 million copies around the world.

It's also the end of a movie institution that has employed dozens of British actors and hundreds of crew members and technicians since the first film came out in 2001.

"It's created such an infrastructure and such an industry, and it will be sorely missed," "Deathly Hallows" director David Yates said Wednesday. "It's been a mini-industry employing hundreds and thousands of people."

He said he didn't expect to see its like again.

"I think lightning doesn't strike twice," Yates said.

__

Martin Benedyk and Cassandra Vinograd contributed to this report.

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Toronto, London Stock Exchange abort merger plans (Reuters)

TORONTO (Reuters) – The London and Toronto stock exchanges abandoned plans for a C$3.6 billion merger on Wednesday, as it became clear they would not win enough shareholder support for their transatlantic alliance.

"It is clear that the two-thirds threshold required to approve the merger would not have been achieved," Toronto Stock Exchange operator TMX Group said in a statement.

The London Stock Exchange would have owned 55 percent of the new venture, designed as a powerhouse in resource and energy equity.

(Reporting by Pav Jordan; editing by Janet Guttsman)

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