ANTIQUES SHOPS

It is now up to a Manhattan federal jury to decide if this evidence against Gupta, a former board member at Goldman Sachs Group Inc and Procter & Gamble Co, is persuasive enough to convict him.

Historically, insider trading cases have been difficult for prosecutors to win because of their circumstantial nature. The investigation of Rajaratnam -- built on eight months of court-approved wiretaps and culminating in his conviction at trial last year -- was a major exception because the government had dozens of secretly recorded telephone calls of him discussing stock tips with friends and associates.

In the Gupta case, prosecutors only had a few wiretaps they could use to bolster their charges that Gupta supplied Rajaratnam with some of his juiciest tips. They had no telephone recording between the two men to back one of their most dramatic contentions: that Gupta, a minute after disconnecting from a Goldman board conference call on September 23, 2008, told Rajaratnam about plans by Warren Buffett's Berkshire Hathaway to inject $5 billion in the investment bank.

The jury heard evidence that Rajaratnam hurriedly ordered his traders at hedge fund Galleon Group to try to buy $40 million worth of Goldman stock in the few minutes that remained in the trading day after he received that 35-second call from Gupta.

"There was only one call to Rajaratnam's direct line in the last 10 minutes of the trading day, only one call in the last hour," Assistant U.S. Attorney Richard Tarlowe said in his closing argument Wednesday. "And it was from Rajat Gupta."

Gupta's defense lawyer, Gary Naftalis, responded: "If he was truly rushing, he wouldn't have waited a minute, he would have called in two or three seconds."

Lawyers following the trial have different opinions about how the jury might view the circumstantial evidence.

JaneAnne Murray, a white-collar defense attorney and professor at the University of Minnesota Law School, said even circumstantial government evidence in the trial could overwhelm the defense's case.

"The 'wrong place in the wrong time' defense works once, maybe twice," said Murray, who is not involved in the case. "The problem is when one is trying to defuse too many suspicious instances."

But Chicago securities lawyer Andrew Stoltmann, who is also not involved in the case, said the lack of direct evidence could lead the jury to acquit Gupta. An acquittal would halt the office of Manhattan U.S. Attorney Preet Bharara's run of victories in a series of insider trading trials over the past 15 months.

Gupta has said all along that he would put up a vigorous defense, describing the prosecutors evidence as purely speculative and circumstantial.

Defense lawyers wanted to play the jury wiretaps of a Goldman Sachs employee tipping off Rajaratnam about other companies to demonstrate that the money manger had other potential sources of information on the firm. The judge ruled that evidence was inadmissible because it was separate from anything in the indictment of Gupta and was likely to confuse the jury.

Gupta is charged with securities fraud and conspiracy, which carry a maximum prison term of 25 years.

BUSINESS AND FRIENDSHIP

Throughout the four-week trial, prosecutors also emphasized the years of friendship and business dealings between Rajaratnam and Gupta as evidence of how the defendant would benefit from conspiring with the hedge fund manager.

They also pulled out some star witnesses, including Goldman Chief Executive Officer Lloyd Blankfein, who testified that board conversations were always confidential and that he never authorized Gupta to share material corporate information with an outsider.

Defense lawyers sowed a few seeds of reasonable doubt, arguing that their client had no motive to leak inside information. They presented evidence that Rajaratnam had cheated Gupta out of $10 million in a joint investment called Voyager Capital Partners. The defense said the two had had a falling out in 2008.

Gupta's lawyers suggested that their client's calls to Rajaratnam could have been about the Voyager investment. "He was trying to get information on Voyager, and it had nothing to do in the world with Berkshire Hathaway," Naftalis said.

Geetanjali Gupta, the eldest of the defendant's four daughters, testified to her father's distress over Rajaratnam's handling of the investment at the time.

The jury also heard from associates and old friends that Gupta was respected for his integrity and had nothing to gain financially from helping Rajaratnam.

"There will be a lot discussion in the jury room about motive and lack of motive," said Tom Dewey, a partner at law firm Dewey Pegno & Kramarsky in New York, who is not involved in the trial.

The jurors paid very close attention throughout the trial to both sides of the case, with about half of them taking notes on yellow legal notepads.

Gupta at one point appeared likely to testify, but in the end did not.

He may have missed a chance to tell the jury his version of events, create more reasonable doubt and bring out more about his work in efforts to fight AIDS, malaria and tuberculosis in developing countries.

"Better than his lawyer, nobody could have sold the explanation better than Gupta as to why he did what he did," said securities lawyer Stoltmann.

The most important wiretaps in the case were conversations between Rajaratnam and two of his senior employees.

In one call, the day after the Buffett investment announcement, Rajaratnam told trader Ian Horowitz: "I got a call at 3:58, right? ... Saying something good might happen to Goldman."

On October 24, 2008 Rajaratnam is caught on the wiretap telling portfolio manager David Lau: "Um, now I, I heard yesterday from somebody who's on the board of Goldman Sachs, that they are gonna lose $2 per share. The Street has them making $2.50."

Prosecutors said Gupta had called Rajaratnam on October 23, 2008, only 23 seconds after a Goldman board meeting heard the firm was headed toward its first quarterly loss ever as a public company.

The case is USA v Gupta, U.S. District Court for the Southern District of New York, No. 11-907.

(Additional reporting by Basil Katz; Editing by Martha Graybow and Lisa Von Ahn)

Those bets used Wall Street derivatives called credit default swaps. They are supposed to act like homeowners insurance, allowing bondholders, banks and hedge funds to buy protection against declines in the value of corporate debt, and ultimately protection against a default.

In this case, though, they became more like the pawns in a battle between JPMorgan and hedge funds on the other side of its bet. This struggle so dominated a corner of the market that it sent false negative signals about the credit quality of some major companies whose underlying finances were largely unchanged, market experts said.

A Reuters analysis shows that in recent weeks the trading may have sharply increased the cost of default insurance for companies such as railroad operator CSX Corp and McDonald's Corp.

In late April, CSX indicated it was in good financial shape. The company reported first-quarter earnings that beat analysts' expectations, while ratings agency Standard & Poor's said it expected CSX's credit "to remain satisfactory."

Yet the cost to insure against a default at CSX surged 28 percent to $64,300 for five-year protection on $10 million in debt on May 14 from $50,100 on May 1. At the same time, the company's stock fell just 5 percent.

A CSX spokesman declined to comment.

There was a similar pattern at McDonald's. The cost of protecting the fast-food company's debt against default rose more than 19 percent to $24,300 on May 14 from $20,400 on May 10, while McDonald's stock fell just 1.1 percent.

Again, there was no news during that time to explain a significant increase in the cost of default insurance. "It's business as usual for us at McDonald's," spokeswoman Becca Hary said when asked about the jump.

CRITICAL PERIOD

The first two weeks of May were a critical period because JPMorgan announced May 10 that a flawed trading strategy led to at least $2 billion in paper losses for the bank. The losses could eventually total $5 billion or more, analysts said.

Trading in default insurance for major U.S. companies showed unusual spikes during that time.

To be sure, renewed concerns about the U.S. economy and the European debt crisis are at least partly responsible for increasing worries about companies' financial health. There is no way to quantify whether JPMorgan-related trading contributed more or less than the broader economic concerns to the increases in costs for credit default insurance.

A JPMorgan spokeswoman said there was no causal link between the credit derivatives prices and the trading tied to the bank's losses. The theory, she said in an emailed statement, "is wrong and ridiculous."

But the Reuters analysis showed the 121 companies underlying the index of credit derivatives at the heart of the trading battle had a sharper increase in default insurance costs than 41 companies in a separate index that was not believed to be part of the big bets.

The trend held true even when distressed companies, whose default insurance costs are more sensitive to market movements, were removed from the analysis. Reuters used data from Markit, the index publisher, for the analysis.

New York University finance professor Marti G. Subrahmanyam, who looked at the results of Reuters' analysis, disputed JPMorgan's statement that there was no cause-and-effect relationship between the big bets and the subsequent increase in default insurance costs.

"How could it be otherwise?" Subrahmanyam said. "The whole market knows that one agent has a substantial position, and the market will react to that."

WIDER INFLUENCE

Peter Tchir of TF Market Advisors, a financial advisory firm in New Canaan, Connecticut, analyzed the trading in May and said the spikes in default insurance were a result of the struggle between JPMorgan and the hedge funds. That type of trading "can just influence the whole market," Tchir said.

On Friday, Barclays Capital analysts said default insurance for some companies was more expensive than their credit quality seemed to warrant.

Making a direct comparison is impossible because there are no companies that are exactly similar to the 121 in the index at the center of the trades, Subrahmanyam cautioned.

But if the broader economic concerns were the dominant factor, companies in the unrelated index should have had an equally strong jump in the cost of their credit insurance, Subrahmanyam said.

A surge in credit default swap prices can sometimes make a big difference for companies. When the cost of insurance increases, it can signal a company is in trouble because investors, increasingly worried that debt won't be repaid, buy more protection against default.

For example, the cost to protect against default at Bank of America Corp climbed last autumn, sending jitters through the stock market.

A company's borrowing costs can be affected. At least 33 of the 121 companies in the credit default swap index in the JPMorgan trades have loan commitments from banks whose interest rates are tied to various versions of the index or their individual default insurance costs. Companies use these loan commitments to provide cash for day-to-day operations.

Financially strong companies typically do not tap the loan commitments except in times of stress.

A look at one credit agreement illustrates how borrowing costs can be affected. Caterpillar Inc has a $3.9 billion loan commitment whose interest rate will go up if its five-year default protection increases, according to Thomson Reuters LPC data.

From May 1 to May 14, the construction equipment maker's five-year default insurance has increased to $104,000 a year from $82,900. That means that if Caterpillar had to tap the loan commitment, its cost to do so would have increased. Under the agreement, though, the company's interest rates on the loan would be calculated based on a maximum default insurance cost of $100,000.

A Caterpillar spokesman declined to comment.

(Editing by Dan Wilchins, Alwyn Scott, Martin Howell and Lisa Von Ahn)

Just two days ago, the 14-year-old Zhang was told he had gained a spot in the 156-player field for the year's second major, making him the youngest player to compete in the event since World War Two.

He is possibly the youngest U.S. Open competitor ever, but the tournament's records are not fully comprehensive before 1945.

Whichever way you look at it, Zhang's achievement is remarkable and he has earned the respect of golfing heavyweights such as 14-times major winner Woods and defending U.S. Open champion Rory McIlroy.

Woods made a point of walking up to Zhang on the practice range at the Olympic Club and shaking his hand, leaving the young Chinese spell-bound.

"I was on the range, hitting balls," Zhang told reporters on Wednesday about his surprise encounter with the former world number one. "My buddy, Chris, he was like, 'Hey, Andy look behind you, it's Tiger'.

"I looked back, it was Tiger walking up. I got really excited, and he actually came up to me and shook my hand. And I was like, 'Wow, I just shook Tiger's hand'. Obviously I'm really excited."

Zhang, who is based in Florida and does his school work on-line, earned his place in the U.S. Open on Monday when Britain's Paul Casey withdrew from the event because of a shoulder injury.

"I don't have that high (level) of expectation for this time," Zhang said of his goals for this week. "I just want to come out here, enjoy myself and learn as much as possible, just have fun, I guess."

Northern Irishman McIlroy, himself aged just 23, believes that is the best strategy for Zhang as he competes this week on golf's biggest stage.

WORDS OF WISDOM

"When I was 14 I was getting prepared to play in my club championship, not the U.S. Open," world number two McIlroy grinned, "so I'm not sure I could give him any words of wisdom.

"I think he should just enjoy it, take it all in and just realise that he's got so much more time to develop and mature. By the time he's 18 he'll feel like a veteran."

For the moment, Zhang is simply trying to calm his nerves and handle the bright glare of the media spotlight as best he can.

"I am really excited to be the first person that's a 14-year-old to play in this event and I'm trying to get used to all these media and fans coming up to me and sign autographs," he said.

"I am shaking a little right now sitting here," Zhang added while facing a packed interview room. "I heard Jack Nicklaus was sitting in this chair this morning. Was he?"

Golfing great Nicklaus certainly was, being honoured by the United States Golf Association in the same room earlier in the day on the 50th anniversary of his first U.S. Open victory.

"So I'm trying to get used to all this," Zhang said. "I'm not doing quite well right now."

Zhang has already done well enough this week, and benefited from having a practice round on Tuesday with Masters champion Bubba Watson and Australian Aaron Baddeley.

"And Bubba, I thought I was going to be looking up to him but actually he's just a normal person," Zhang said. "He was really nice to me and he gave me a lot of good tips."

Zhang will make his U.S. Open debut when he tees off in Thursday's opening round with Japan's Hiroyuki Fujita and American Mark Wilson. (Reporting by Mark Lamport-Stokes in San Francisco; Editing by Frank Pingue)

* Fires among biggest in both states' history

* Containment lines cut around 10 pct of Colorado fire

* Lines extended around 35 pct of New Mexico fire

By Zelie Pollon and Keith Coffman

June 12 (Reuters) - Fire crews battling flames roaring through national forests in New Mexico and Colorado have made some progress beating back the blazes that have driven thousands from their homes and destroyed hundreds of dwellings, the authorities said on Tuesday.

The larger of the two blazes, now ranked as the third biggest on record in Colorado, has killed a woman whose remains were found in the ashes of a cabin where she lived alone on the edge of the Roosevelt National Forest, officials said on Monday.

Linda Steadman, 62, was the first casualty of the so-called High Park Fire, which has scorched more than 43,000 acres (17,400 hectares) near the Wyoming border since it was ignited by lightning late Friday or early Saturday, and the fourth fatality in a Colorado wildfire this year.

Over 100 structures, including an undetermined number of homes, have been destroyed, and hundreds more dwellings - home to roughly 2,000 people - remain threatened by the blaze and are under evacuation orders, Larimer County officials said.

But authorities on Tuesday night reported making some headway against the flames, saying ground crews had managed to cut containment lines around 10 percent of the fire's perimeter. Residents from a couple of neighborhoods would be allowed back into their homes Tuesday afternoon, they added.

Still, federal incident commander Bill Hahnenberg said he anticipated firefighters would be battling the blaze for several weeks, if not into the fall. The plan for Tuesday, he said, was to focus on the southern edge of the fire with a heavy aerial assault to safeguard populated areas.

About 500 firefighters were on the scene on Tuesday, but Hahnenberg said he expected that number to climb to as many as 800 in the days ahead.

"SMOKEY BEAR" FIRE SITE

Hundreds of miles to the south, firefighters also turned a corner against a wildfire burning in the rugged Lincoln National Forest in central New Mexico, where some 37,000 acres (15,000) of mixed conifer have gone up in flames.

By Tuesday night, fire crews had extended containment lines around 35 percent of the perimeter of the Little Bear Fire, helped by calmer winds and higher humidity, officials said.

Damage-assessment teams reaching the fire zone for the first time on Tuesday determined that 224 homes and 10 outbuildings had been destroyed. Previously, it had been estimated that 35 structures had been burnt down.

Nine residential areas - which are home to up to 2,500 people - remain evacuated, while the resort village of Ruidoso, a town of some 9,000 year-round residents, is still under threat, said Kerry Gladden, a Ruidoso information officer.

"Our strategies for the day are to strengthen the containment lines, (and) build new bulldozer lines on the side leading down to Ruidoso. We're hitting heavy this morning with air tankers," Gladden said.

Governor Susana Martinez declared a state of emergency in Lincoln County on Tuesday, releasing additional state funds for fire relief.

Nearly 1,000 personnel have been assigned to the Little Bear Fire, including 400 National Guardsmen sent by the governor to help evacuate residents and protect property.

The blaze was sparked by lightning on June 4 and was largely brought under control within days, but high winds blew flames past containment lines last week, giving the fire a second life.

The blaze is in the same area where firefighters in 1950 rescued an orphaned bear cub later dubbed "Smokey Bear." Te animal became the stand-in for the fictional bear of the same name created as a U.S. Forest Service symbol for fire prevention and wildlife conservation. Smokey Bear, who first appeared on posters in the 1940s, became famed for the slogan, "Only you can prevent forest fires."

In southwestern New Mexico, the separate Whitewater-Baldy Complex fire, the largest in state history, was 37 percent contained after blackening 278,708 acres. (Writing by Steve Gorman; Editing by Cynthia Osterman and Andrew Osborn)