FIAT DEALERS GARAGES

* Watanabe bows, makes public apology

* Nomura shares gain 2.2 pct, beat Nikkei gain

* Squat-loo proposal voted down

* Watanabe was paid $1.6 mln last year, incl options (Adds fresh detail, quotes, story links, updates shares)

By Emi Emoto and Nathan Layne

TOKYO, June 27 (Reuters) - Kenichi Watanabe was re-elected as CEO of Nomura Holdings on Wednesday, but faced a series of tough questions from shareholders about the Japanese broker's slumping share price and his handling of a protracted insider trading probe.

The 59-year old bowed in apology at the annual shareholders' meeting in central Tokyo's Hotel Okura and vowed to shore up compliance in the wake of the third insider trading scandal to rattle the broker since he took the helm in April 2008.

"We have caused worry and trouble, and for that I would like to humbly apologise," Watanabe said in his first public appearance since the first of three insider trading cases linked to Japan's largest investment bank was announced in late March.

Watanabe said he would publish an internal investigation into the matter by the end of the month. That report will be followed by a penalty from the regulator ranging from an order to improve compliance to a more damaging suspension of some operations for weeks, sources with knowledge of the situation have said.

Shareholders voiced their discontent on a range of issues - from a near-30 percent drop in the stock price over the past year to progress on Nomura's overseas expansion following its purchase of Lehman Brothers' Asian and European operations in 2008.

Some of the harshest criticism was reserved for management's handling of the insider trading scandal, which has dragged on for months as the broker struggles to come to a consensus with the regulator on how widespread the problems were.

One shareholder drew applause from a packed banquet hall when he said management's stated emphasis on compliance "rang hollow", adding that not completing the internal investigation in time for Wednesday's meeting was an "underhanded" move.

A second shareholder took aim at the broker's sales tactics, which have come under scrutiny. One salesman, for instance, entertained a client 39 times over nine months and showered him with expensive gifts, according to a report commissioned by an asset management firm implicated in the probe.

"The quality of the Nomura salesman is in decline. What happened to the pride of being No.1?," the shareholder said, triggering more applause.

Shareholders voted in all 13 directors on the slate, including board chairman Nobuyuki Koga, who along with Watanabe had been opposed by proxy advisory firm Institutional Shareholder Services, which argued the two leaders should take responsibility for the insider trading scandal.

The voting percentages will not be available until Thursday, Nomura said.

Earlier this month, Nomura confirmed regulators' findings in admitting it was the source of leaks on planned share offerings by energy firm Inpex, Mizuho Financial Group and Tokyo Electric Power. In all three cases, employees at its institutional sales department tipped off clients who profited by selling the shares short ahead of the offering and then buying them back at a lower price.

BETTER ETHICS

Watanabe said he would make improving professional ethics awareness one of three key focus areas of the firm's strategy - along with expanding in Asia and bolstering cooperation between operations in Europe, the United States and Japan.

In a regulatory filing, Nomura said Watanabe was paid 128 million yen ($1.6 million) in the business year to end-March, including stock options. Takumi Shiabata, the company's chief operating officer, received 113 million yen.

Early in the meeting, Watanabe offered the floor to the unnamed shareholder who had managed to place 18 mostly frivolous proposals on the AGM docket - including a call for Nomura to switch its toilets to squat-down Japanese style units to improve staff physique and discipline, and ultimately boost the stock price. The shareholder did not respond, and the proposals were dismissed.

Nomura shares closed up 2.2 percent, outperforming a 0.8 percent gain on the benchmark Nikkei average. Nomura has lost nearly half its market value since Watanabe took the helm, roughly in line with the performance of global rivals Morgan Stanley and Goldman Sachs. (Reporting by Emi Emoto and Nathan Layne; Editing by Chang-Ran Kim and Ian Geoghegan)

* Glencore considering changing the management incentives

* Deal valued at $26 bln at current share prices

By Kate Holton and Sinead Cruise

LONDON, June 27 (Reuters) - Commodities trader Glencore will need to sweeten its $26 billion bid for miner Xstrata or risk losing a deal it has coveted for years after key shareholder Qatar made a late demand for better terms.

Qatar, which remained silent for months as it built the second-largest stake in Xstrata, said in a surprise statement on Tuesday that it supported the principle of the deal but wanted 3.25 new Glencore shares for every Xstrata share, up from the 2.8 on offer.

The 11th-hour rebuff will make it very difficult for Glencore and Xstrata to push the merger through on current terms, several sources close to the deal said, leaving just two days for Glencore to sweeten the offer or delay shareholder meetings scheduled for mid-July.

The very public move could embolden other vacillating investors, particularly those angry over the hefty packages being offered to retain top executives at Xstrata, including an extra 29 million pounds over three years just to keep Chief Executive Mick Davis.

"The intervention by Qatar was unexpected but highly welcome and will certainly bolster the resolve of current holdouts," Simon Wong, partner at corporate governance watchdog and shareholder advisory firm, Governance for Owners.

"Most investors understand the rationale for the proposed merger and, in that sense, there may not be lasting damage at the company level. At the board level, it may be difficult to restore trust with shareholders without changes in board leadership."

Analysts and other Xstrata shareholders warned that the stakes were high as Glencore could refuse to budge, effectively kicking the deal down the road for at least six months or as much as 12.

"Whether Glencore now wishes to raise its offer, having faced down independent shareholders for the last four months, is questionable," said Neil Dwane of CIO Allianz Global Investors Europe, another top 35 Xstrata investor.

"The Qatar ratio would be circa 10 percent dilutive to Glencore. In fact, given the coordinated global economic slowdown, an argument could be made for actually lowering the price to reflect worsening prospects for miners."

CHARM OFFENSIVE

The statement triggered intense negotiations and an emergency charm offensive from Glencore executives trying to understand the Gulf state's motivations and bring them back onside.

"Glencore need to talk to Qatar and find out what they are thinking," said one source familiar with the matter, adding it was too soon to write off the deal.

In the first sign of movement, Glencore released a short statement on Wednesday morning saying the board of Xstrata had proposed to change certain aspects of the management incentive arrangements.

A source familiar with the situation said the proposed changes included tying the retention packages to performance and shifting the plans from cash to equity.

"On the surface, one cannot understand why Xstrata's CEO requires a retention package given that he will be the CEO of the combined entity and, moreover, he is already extremely well compensated," said Wong at Governance for Owners.

"I really don't expect them to go to 3.25 or to get rid of the retention package completely, but I think it may well be worth their while to come up with some sort of compromise," said Charles Stanley analyst Tom Gidley-Kitchin.

At a ratio of 3.25 percent, the offer would be worth $30 billion as opposed to $26 billion for a ratio of 2.8.

The structure of the offer gives minority investors substantial power - opposition from just over 16.5 percent of the total shareholding could sink the deal, given approval is required from 75 percent for the main vote on the offer, and Glencore does not vote.

The vote on pay requires a simple majority, but both will need to go through for the deal to succeed.

Glencore, which made its move on Xstrata in February, had been expected to improve the terms of its all-share deal in the early days after the offer was announced.

But those hopes faded in the months that followed as Glencore, already Xstrata's largest shareholder, with almost 34 percent, stuck to its guns, as target Xstrata faced falling thermal coal prices and increased uncertainty over Argentina and Peru - key to its growth prospects.

MOVING TARGET

On Tuesday, before Qatar's unexpected announcement, Xstrata shares were trading around a 2.6 ratio, implying the market was not expecting a change to terms. Shares in both firms moved wildly on Wednesday, with Glencore down 3.4 percent at 0925 GMT and Xstrata down 1.5 percent.

Analysts said it was not clear Glencore would raise its bid as high as 3.25 - at the high end of initial expectations and a level at which some say the deal could destroy value for Glencore.

"We believe a bump - probably from 2.8 to 3.0 Glencore shares per Xstrata share - may be necessary to win over (Qatar) and other Xstrata shareholders," Jefferies analysts said. "However, we do not believe Glencore will bump to a ratio of 3.25 times."

Analysts said failure to secure the deal would not only cause a short-term drop in Xstrata shares, currently trading at a premium to the sector, but would also prove damaging for Glencore, whose bosses have long traded on their reputation as dealmakers.

It would also, though, prove potentially damaging for Qatar, which has invested more than $4 billion to become Xstrata's largest minority shareholder.

Several sources close to the deal said on Tuesday that Qatar's demand for 3.25 was likely a negotiating position, part of a strategy that included Tuesday's unexpectedly public statement.

"In our view, the news about Qatar requesting a bump and the recent strong shareholder opposition to the Xstrata management retention awards are problems. But ... these are likely not insurmountable hurdles to the proposed Glencore Xstrata merger," Jefferies said.

"We continue to expect this proposed merger to happen."

Richard Marwood, a portfolio manager at AXA Investment Managers, a top 40 Xstrata investor, said the external pressure from Qatar would give Glencore an opportunity to revise the terms "without too much loss of face".

Glencore and Xstrata have until Thursday to alter the terms of the deal without having to change the dates of shareholder votes, set for mid July.

Glencore and Xstrata have declined to comment on the Qatari announcement.

First-half revenue growth was also expected to be below 10 percent, as Indian and Korean markets were weak and mortgage income in Hong Kong fell, StanChart said on Wednesday.

"My numbers show we can hit double-digit (full-year) income growth," finance director Richard Meddings said. "The issue is, in a world like this with the euro zone pressures and exchange rates, there is more risk to the downside."

Africa, China, Indonesia and Malaysia all delivered revenue growth over 10 percent in the first half.

But the euro zone crisis hit investor sentiment in May and June, Meddings said, and wealth management income was hurt by weak demand for equity products. Global trade volumes could be hurt if the crisis continues, he said.

Staff numbers were kept largely flat at the end of May from the end of 2011, StanChart said. The bank employed about 85,000 people at the end of last year, it said in March.

Led by chief executive Peter Sands, the bank grew exponentially for much of the past decade, riding on Asia's rise and reporting a ninth straight year of record earnings in 2011 on the back of buoyant growth in Hong Kong and Singapore.

However, concern over slowing growth in large Asian markets, such as China and India, has weighed on its stock this year.

Meddings told reporters he was comfortable with analysts' 2012 forecasts. Pretax profit was forecast to rise 10.6 percent to $7.4 billion, according to a Thomson Reuters I/B/E/S poll.

"Many people are expecting things to slow, and this has been reflected in the share price," said Adam Chan, an analyst at CCB International who has an "outperform" rating on the stock.

"Management knows that sentiment is weak, and that is why they are choosing to invest this year and have those investments pay off in 2013 or 2014 when things get better."

The bank said it will step up the pace of investment. In Africa, it aims to add 100 branches to its 160 branches within two years, rather than three years as previously planned.

INDIA PROFIT WEAK

The update provided few numbers as StanChart only issues half-year and full-year earnings reports.

The weakness of the Indian rupee and other Asian currencies would drag income down more than 2 percent, as the bank reports in dollars.

Profit in India, once its biggest market, continued to be weak, hit by deteriorating business confidence that has pushed the rupee to a multi-year low.

Growth in the Asian financial hubs of Hong Kong and Singapore also slowed. Its biggest market, Hong Kong, was expected to see income grow around 10 percent, while the bank said Singapore saw "good income momentum" without naming it among markets that saw double-digit growth.

Previously, both cities had consistently reported earnings growth of more than 10 percent. Revenues and profit from Singapore have more than doubled since 2007.

Standard Chartered, which started life financing trade between Europe and Asia and Africa, expected its wholesale bank - which includes investment banking and accounts for about three quarters of earnings - to drive future growth.

Its London-listed shares were up 1.0 percent at 1,347 pence at 0752 GMT, in line with a firmer European bank index. The shares are down 5 percent this year, in line with the banking index. (Additional reporting by Steve Slater in London; Editing by Alex Richardson and Dan Lalor)