* Proposes $3/share extra dividendSTOCKHOLM, Oct 18 (Reuters) - Telecom group Millicom’s mobile internet and non-voice services drove earnings higher in the third quarter, and the emerging market-focused operator is planning an extra shareholder payout at year-end.Millicom said on Tuesday it would propose an extra dividend of $3 per share to be paid in December, bringing total payouts to owners this year to near $1 billion.Earnings before interest, tax, depreciation and amortisation (EBITDA) were $529 million, while the average forecast from analysts in a Reuters poll was $538 million.The Latin America and Africa-focused operator repeated it saw 2011’s EBITDA margin at over 45 percent, but raised its forecast for operating free cash flow.Millicom has traditionally relied on new subscribers to drive growth, but has shifted focus recently to higher-paying customers.It said the focus on value-added services such as money transfer had driven growth in the quarter, with overall revenues up 9.1 percent in local currencies.Data-related revenue nearly doubled in Latin America, the company’s biggest market.”The strong growth we are seeing in data and mobile financial services across the Group reinforces our growth ambitions,” the company said in a statement.It added that investment in value-added services would increase revenues, average revenues per user, core profit and return on capital, but would dilute the core profit margin.

Mainland shares listed in Hong Kong .HSCE fell more than 4 percent after China reported gross domestic product eased to 9.1 percent for the quarter, slightly below forecasts of 9.2 percent, indicating the world’s second-largest economy expanded at its slowest pace since the second quarter of 2009.Whilst the numbers did not greatly increase fears of a “hard landing,” they prompted investors to lock in gains from last week, when the country’s sovereign wealth fund sparked a rally by buying shares of its big four banks.”The pace of moderation has so far been measured, and today’s numbers reinforce our view that a soft landing is in sight,” said Connie Tse, Economist at Forecast in Singapore.As risk aversion returned, investors rushed to seek protection in the options market against losses, with the CBOE Volatility index VIX .VIX — a 30-day risk forecast of volatility in the S&P 500 — rising 18.2 percent to 33.39 on Monday, its highest one-day jump since August.In Asian credit markets, spreads on the iTraxx Asia ex-Japan investment grade index, another gauge for whether investor risk appetite is returning, widened by about 13 basis points on Tuesday, after tightening by about 26 points over the past week on hopes of progress in Europe.Germany’s finance minister, Wolfgang Schaeuble, said on Monday that even though European governments would adopt a five-point platform to address the crisis, a definitive solution would not be reached at the October 23 European Union summit.This came in the heels of a Group of 20 meeting of finance ministers in Paris the past weekend, which had raised expectations that European banks would be recapitalized, and the region’s bailout fund expanded to deal with a potential debt default by Greece.”Although markets were not expecting the debt crisis to be resolved overnight, shares prices are likely to succumb to profit-taking after a rally,” said Hiroichi Nishi, equity general manager at SMBC Nikko Securities.MSCI’s broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS fell 2.6 percent, with the materials sector .MIAPJMT00PUS in the MSCI index slumping more than 3 percent.The Nikkei stock average .N225 fell 1.3 percent, while Australian shares were down 1.8 percent.World stocks, as measured by the MSCI’s all-country world equity index .MIWD00000PUS, fell 1 percent, and U.S. stocks suffered their worst loss in two weeks on Monday, with the Dow Jones industrial average .DJI down 2.12 percent.The MSCI index has recovered from 15-month lows by more than 10 percent in the past nine days, on growing expectations Europe was finally accelerating efforts to resolve its debt crisis.”Don’t expect a long running leg of good news. There isn’t a trend right now,” Colin Bradbury, Daiwa Capital Markets’ regional chief strategist for Asia ex-Japan, said of the headlines news about the European debt issues.Given that this is the fourth quarter, and very strong potential for a rebound in some stocks, investors may be tempted to lock in short-term profits to add whatever return they can get, he said.Concerns about the euro zone sovereign debt problems hurting sentiment, a slowdown in the Asian regional growth and an expected downgrade to earnings forecasts over the next 3-6 months will likely continue to pressure the markets, he said.Asian shares are extremely cheap, and could spur buying and limit the downside from here, but it is currently “too soon to be jumping back into high beta cyclicals,” he said.Technicals were also turning bearish, suggesting risk aversion remains.The euro failed to breach a September high against the dollar around $1.39 on Monday, while the Australian dollar has faced resistance at its 200-day moving average of $1.03792.The S&P 500 also turned around from its August 31 high around 1,230.The euro fell from a one-month high against the dollar of $1.39148 hit on Monday.Oil edged up, with Brent crude gaining 0.1 percent to $110.29 a barrel and U.S. crude futures also up 0.1 percent at $86.47.Retreating appetite for risk benefited government bonds, with 10-year U.S. Treasuries gaining 23/32 in price to yield 2.17 percent on Monday.But other assets perceived as safe-haven such as gold were lacklustre, with spot gold was nearly flat and the dollar index .DXY fell 0.2 percent.

In a Special Edition letter posted on PIMCO’s website, Gross, who runs the $242 billion PIMCO Total Return portfolio, wrote that he underestimated the contagion effect from the Europe debt crisis and the U.S. debt ceiling debacle.”As Europe’s crisis and the U.S. debt ceiling debacle turned developed economies toward a potential recession, the Total Return Fund had too little risk off and too much risk on,” said Gross, who also shares the title of co-chief investment officer at Pacific Investment Management Co. with Mohamed El-Erian.Gross, known as the “bond king”, came under heavy criticism earlier this year when he bet heavily against U.S. Treasuries which have turned out to be one of the biggest outperformers of 2011.His fund’s poor performance led Gross to simply call his open letter to investors, “Mea Culpa.”It is up only 1.06 percent year to date versus the benchmark BarCap U.S. Aggregate Index which is up 3.99 percent.Gross, who helps manage more than $1.2 trillion at PIMCO, said late Friday the Total Return fund had positions in German bonds and Canadian Treasuries to counter the U.S. underweight position, “but not enough.”He added that minor percentages of emerging market corporate and sovereign debt, effectively denominated in their local non-dollar currencies, did not perform well either.”The simple fact is that the portfolio at midyear was positioned for what we call a “New Normal” developed world economy - 2.0 percent real growth and 2 percent inflation,” Gross said.That’s all changed, of course. Gross said PIMCO’s internal growth forecast for developed economies “is now zero percent over the coming several quarters and the portfolio more accurately reflects this posture.”Last week, Reuters reported that Gross ramped up buying of mortgage-backed securities in September, albeit by using leverage, on the likelihood the Federal Reserve’s reinvestment program in those securities will boost prices significantly.Gross increased mortgage debt to 38 percent of assets in September, from 32 percent in August, as the U.S. central bank announced last month that it “will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.”His move into mortgage-backed securities also comes as the PIMCO Total Return fund’s cash equivalents and money-market securities fell to negative 19 percent September, from negative 9.0 percent in August.In having a so-called negative position in cash equivalents and money-market securities, it is an indication of using derivatives and short-term securities as collateral in order to boost the fund’s buying power with leverage.Gross’ move to seek more yield by putting more money into mortgage bonds is yet another bold bet which many will be watching after Gross’s call on Treasuries cost his fund’s performance. In doing so, he is effectively extending the average duration of his fund’s investments, making them potentially more exposed to a rise interest rates.Clearly, Gross is betting interest rates will remain low for some time as the world economy continues to struggle.In his “mea culpa” letter, Gross resorted to baseball analogies and metaphors. He closed his letter by saying: “This is big league ball, where your ticket holders come to the park expecting not a circus-Willie Mays-catch but more wins than losses and a year-end performance that places your bond assets near the top of the standings.”He added, “Baseball metaphors aside, we know why PIMCO Total Return is arguably the largest and hopefully the greatest bond fund in the world.”