ANTIQUES SHOPS

Dimon, testifying on Tuesday for the second time in a week before lawmakers about the failed hedging strategy, acknowledged that JPMorgan in January changed a "value-at-risk" model for the trading portfolio in question.

The bank did not disclose the change until May 10, when Dimon also revealed that the trading portfolio had produced at least $2 billion in losses.

"We disclosed what we knew when we knew it," Dimon told the House Financial Services Committee on Tuesday.

Dimon's comments came after the committee heard from a panel of regulators, including Securities and Exchange Commission Chairman Mary Schapiro, who gave more details about her agency's investigation into the trading loss.

Schapiro said the SEC is looking at whether JPMorgan misled investors in its April earnings statements by failing to disclose the value-at-risk (VaR) change. At that time, Dimon also called press reports about a "London whale" trader with an outsized position a "tempest in a teapot".

The model change disguised a spike in the riskiness of the particular trading portfolio by cutting in half its VaR number.

"If you chose to speak, you absolutely must speak truthfully and completely and not allow yourself to leave any kind of misleading impression from the information that you are putting out," Schapiro said.

Dimon's testimony on Tuesday followed his appearance last Wednesday before the Senate Banking Committee, where senators were mostly deferential.

A few members of the House Financial Services Committee went harder at Dimon, asking him repeatedly to defend the size of JPMorgan, the nation's largest U.S. bank by assets.

"No, we're not too big to fail," said Dimon, who at times appeared more tired and exasperated than during last week's hearing.

"I don't think there's any chance we're going to fail," he added.

The SEC is investigating the trading loss, along with the Commodity Futures Trading Commission. The FBI has also said it is looking into the losses.

Schapiro on Tuesday gave her most detailed comments yet on her agency's probe.

"The area we're focused on and concerned about is a change with respect to the VaR model they used for their earnings release on April 13 that had the effect, yes, of understating the value-at-risk," Schapiro said.

She said it is hard to say what sort of financial penalty JPMorgan could face, but said the agency has a large number of potential sanctions.

(Reporting by Sarah N. Lynch, Dave Clarke and David Henry; Writing by Karey Wutkowski; Editing by Tim Dobbyn)

* Revenue falls 2 pct

* Fixed income rev up 31 pct; investment banking down 10 pct

* Asset management fees, income from funds down 82 pct

* Shares rise 3 pct (Adds details from conference call, analyst comments, updates share movement)

By Tanya Agrawal

June 19 (Reuters) - Investment bank Jefferies Group Inc's profit beat muted Wall Street expectations, helped by a strong performance by its fixed income business as investors sought safety in bonds.

As the first investment bank to report earnings, Jefferies is often viewed as an indicator for larger Wall Street banks such as Goldman Sachs Group and Morgan Stanley.

Analysts have cut their targets on several investment banks over the last two months due to weak equity markets and a growing crisis in Europe.

Jefferies has been looking to expand overseas and is reportedly planning to establish a European financing arm this year in an effort to grab market share from rivals scaling back corporate lending.

"In Europe, we're seeing capital markets start to take share from the banks in terms of debt financing and that's definitely something that is giving us some momentum in investment banking and fixed income in that region," a company executive said in a post-earnings conference call with analysts.

Although Jefferies' fixed income business held up well during the quarter, its investment banking and asset management business failed to live up to the expectations.

Fixed income revenue rose 31 percent to $293 million, while investment banking revenue fell 10 percent to $297 million.

(For a Breakingviews column on Jefferies )

The midsized investment bank earned $63.5 million, or 28 cents per share, compared with $80.6 million, or 36 cents per share, a year earlier. Revenue fell 2 percent to $711 million.

Excluding items related to its acquisition of historic British stockbroker Hoare Govett from Royal Bank of Scotland and other items, the company earned 31 cents per share.

Analysts had expected the company to earn 28 cents per share, according to Thomson Reuters I/B/E/S.

"It's earnings won't really see any momentum on the upside till the fall, because it will be unable to outperform the weak markets," said Richard Bove, analyst with Rochdale Securities.

Jefferies shares had come under intense pressure after brokerage MF Global Holdings Ltd filed for bankruptcy in October 2011 as investors worried that Jefferies might have similar troubles.

The company has since taken steps to boost investor confidence by selling billions of dollars worth of Greek, Irish, Italian, Portuguese and Spanish debt in a matter of days.

Shares of the New-York based company, which have fallen about 6 percent since the beginning of the year, rose 3 percent to $13.53 on Tuesday morning on the New York Stock Exchange. (Reporting by Tanya Agrawal in Bangalore; Editing by Supriya Kurane)

Late on the second and final day of talks in Moscow, diplomats said negotiators were still far from agreement on Iranian work which the United States, China, Russia, Germany, France and Britain fear may be aimed at building nuclear arms.

The six powers want Tehran to stop enriching uranium to levels that bring it close to acquiring weapons-grade material, but Iran has demanded relief from economic sanctions and an acknowledgement that it has the right to enrich uranium.

If talks collapse, anxiety could grow on financial markets over the danger of higher oil prices and conflict in the Middle East because Israel has threatened to attack Iranian nuclear sites if diplomacy fails to stop Tehran getting the bomb.

"We did not come to Moscow only for discussions. We came to Moscow for a resolution. But we believe the opposite side is not ready to reach a resolution," an Iranian diplomat said.

Iran says its program has only non-military purposes but the so-called P5+1, grouping the five permanent members of the U.N. Security Council plus Germany - say Tehran must do more to prove this and permit United Nations inspections of its work.

"Our key requirements are: stop, shut and ship," said a Western diplomat who was present at the talks.

He was referring to demands for Iran to stop producing higher-grade uranium, ship any stockpile out of the country and close down an underground enrichment facility, Fordow.

Diplomats said efforts were being made to find enough common ground to press on with talks in Moscow, and to ensure negotiations continue elsewhere in the future.

"There are a lot of ideas in play. It's part of the ebb and flow of negotiations," said a Western envoy.

"Contacts are still ongoing to seek a way forward," another Western diplomat said after hours of talks on Tuesday.

RUSSIAN HOPES

Deputy Foreign Minister Sergei Ryabkov, who leads Russia's delegation at the talks, said as talks resumed on Tuesday that diplomacy could still work even though a European Union spokesman had described day one as "intense and tough".

"I don't think anything will break down. We will have a reasonable outcome," Ryabkov said.

But other diplomats were less optimistic and hopes receded as the day wore on with no sign of progress.

The Moscow talks follow two rounds of negotiations since diplomacy resumed in April after a 15-month hiatus during which the West cranked up sanctions pressure and Israel repeated its threat to bomb Iranian nuclear sites if diplomacy failed.

A series of United Nations Security Council resolutions since 2006 have demanded Iran suspend all its enrichment-related activities. Tehran denies planning to build nuclear weapons and says its program is purely for civilian purposes.

Rather than halt enrichment - a process which refines uranium for use as fuel or, if done to a much higher level, nuclear bomb material - Iran has increased its activities.

Experts had said even before the talks began that a breakthrough was unlikely.

The P5+1 are wary of making concessions that would let Tehran draw out the talks and gain the time needed to develop nuclear weapons capability. Iran's negotiators want a deal that they can sell at home as a triumph.

"No diplomatic deal to solve the Iranian nuclear standoff will be possible if it does not allow Tehran's leadership to proclaim some measure of victory, most probably a recognition of Iran's right to enrich uranium for civilian reactors," said George Perkovich of the Carnegie Endowment for International Peace, a think-tank.

NEW SANCTIONS

An EU embargo on Iranian oil takes full effect on July 1 and new U.S. financial sanctions some days before that. Iran's crude oil exports have fallen by some 40 percent this year, according to the International Energy Agency.

Increasing the pressure, Israel - widely believed to be the only nuclear-armed country in the Middle East - has said time is running out before Iran's nuclear facilities, some of which are deep underground, become invulnerable to air strikes.

In early 2010, Iran announced it had started enriching uranium to 20 percent purity, a level much higher than what is needed for power generation and seen by some experts as a dangerous step towards being able to make bomb material.

The six powers want a substantive response to their offer of fuel supplies for Tehran's research reactor and relief in sanctions on the sale of commercial aircraft parts to Iran.

Diplomats said the powers had also suggested, at a meeting in Baghdad in May, that they suspend introducing new sanctions at the U.N. level while diplomacy is taking place, but only if their demands on high-grade uranium are met.

After meeting at the G20 summit in Mexico on Monday, Russian President Vladimir Putin and U.S. President Barack Obama again called for Tehran to prove its nuclear program is not aimed at developing weapons. Obama said they had agreed there was still time for a diplomatic solution to the standoff.

(Additional reporting by Fredrik Dahl in Vienna; Writing by Justyna Pawlak; Editing by Timothy Heritage and Andrew Roche)