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Dec 2 (Reuters) - The following were the top stories in The Wall Street Journal on Thursday. Reuters has not verified these stories and does not vouch for their accuracy.
* U.S. regulators and several Wall Street banks are in preliminary talks aimed at reaching settlements to resolve a probe of sales of mortgage-bond deals that helped unleash the crisis.
* The U.S. Federal Reserve disclosed the extent to which it supported foreign banks and U.S.-based investment banks in the worst days of 2008, and the breadth of its lending to other firms.
* Republicans and Democrats Wednesday sat down to negotiate a compromise on extending Bush-era income tax cuts -- an effort that could be the first step toward a deal this month that many strategists in both parties believe will temporarily extend current tax rates for all income levels.
* Credit markets are likely to get tougher for midsize companies and those with the weakest credit ratings, which could lead to a new wave of bankruptcy filings.
* Seven members of the White House's deficit commission, including the chairman of the Senate Budget Committee, endorsed its final plan Wednesday, setting up the prospect of action to address the nation's fiscal woes next year.
* Top U.S. retailers including Wal-Mart Stores Inc (WMT.N) and Target Corp (TGT.N) are battling to limit a new federal law that could force them to report whether their store-brand goods contain minerals from war-torn Central Africa.
* Spain and Italy, the countries that with Portugal appear most at risk from being enveloped by the euro zone's deepening debt turmoil, are leading an effort to spur more decisive action from the European Central Bank in order to prevent the crisis from spreading further.
* The U.S. economy is starting to fire on more cylinders, though the upturn remains too weak to bring down high unemployment. Several reports Wednesday showed the recovery gaining muscle, including a measure of payrolls showing that private employers added many more jobs in November than in previous months and a report on manufacturing saying the factory sector had notched its 16th straight month of growth.
* Merck & Co (MRK.N) is expected to announce Thursday a deal to buy a closely held biotechnology company in the early stages of developing a new diabetes treatment, according to a person familiar with the matter.
* Legislation set to be introduced next year would prohibit companies from tracking children on the Internet without parental consent.
* While national chains often use discounts to draw crowds, many independent specialty stores compete by broadening their whimsical appeal and learn the science of understanding trend-conscious consumers.
* A scout for a U.S. petroleum industry research firm is one of the latest foreigners to fall afoul of Chinese laws that classify as espionage what much of the rest of the world considers normal market research.