Easing immediate fears of a credit crunch, banks gobbled up nearly 490 billion euros in three-year cut-price loans from the European Central Bank recently. However, it is still not clear how much will flow to needy euro zone economies.

Hopes of crisis relief before the year-end had been pinned on a massive uptake of the ECB’s ultra-long and ultra-cheap loans after a string of failed attempts by euro zone leaders to thwart market attacks on the bloc’s weaker members.

The funding should bolster finances of banks and ease the threat of a credit crunch and may tempt them to buy Italian and Spanish bonds, thereby easing the sovereign debt crisis of the currency area.

Tags: cheap loans, credit crunch, debt crisis, euro zone, European Central Bank

On Tuesday, gold held steady with prices struck in a narrow $15 range over three sessions as investors stayed on the sidelines amid the year-end holiday season watching for developments in the euro zone debt crisis.

Spot gold edged down 0.1 percent to $1,603.29 an ounce by 7:32 p.m. EST and U.S. gold was little changed at $1,605.20.

Gold and silver speculators cut their bullish bets for the third running week in the week to December 20, with silver net long positions down by more than half, according to the U.S. Commodity Futures Trading Commission.

The largest gold producer of the world, China, churned out 31.75 tons of gold in October, bringing the output in the first 10 months of the year to 290.752 tons, up 4.96 percent from a year earlier.

Tags: Commodity Futures Trading, debt crisis, euro zone, gold, holiday season, spot gold

On Wednesday, Asian stock markets fell as improved economic data out of the U.S. failed to overcome worries about Europe’s festering debt crisis.

Nikkei 225 index of Japan lost 0.1 percent to 8,529.98 while Hong Kong’s Hang Seng slid 1.7 percent to 19,025.92; Benchmarks in Singapore, Taiwan, Australia and mainland China also fell.

From in.news.yahoo.com:

Stocks in Asia didn’t follow through on the momentum from Wall Street, where a session of big swings ended with modest gains. The Dow rose 0.1 percent to 12,096.16. The S&P 500 gained 0.5 percent to 1,257.81, and the Nasdaq added 1.1 percent to 2,686.20.

Data on retail sales showed Americans spending more on autos, electronics and building supplies in October — the fifth straight month of increases.

Sales increased 0.5 percent from the previous month, a faster rate than economists expected and the latest indication that the U.S. economy is likely to avoid another recession.

Europe could head back into recession over the coming months, according to many economists.

Tags: debt crisis, recession, retail sales, S&P 500, stock markets

Italy and Greece technocrat leaders rushing to form governments would be facing a critical test of their ability to limit the damage from the euro zone debt crisis when financial markets open in Europe on Monday.

The President of Italy asked former European Commissioner Mario Monti on Sunday to form a government for restoring market confidence in economy of the country.

Investors will pass initial judgment on his leadership when Italy’s Treasury asks investors on Monday to bid for up to 3 billion euros ($4.1 billion) in five-year government bonds. At an auction last week, the government’s borrowing costs surged above 6 percent and kept rising to levels well beyond what the country could afford to pay over the longer term.

In Asia, stocks and the euro rose on hopes that Monti and Greece’s new prime minister, Lucas Papademos, would take decisive action.

“Symbolically perhaps it’s (Berlusoni’s exit) a positive — it sends the message that it’s putting a certain chapter behind them but the fact remains is that this is difficult medicine to administer and it doesn’t really matter who gives the order, it’s going to be a difficult pill to swallow,” said Jack Ablin, chief investment officer at Harris Trust in Chicago, which oversees $50 billion.

Tags: borrowing costs, debt crisis, euro zone, market confidence

Asian shares inched up while the euro clung to overnight gains on Friday but markets largely stayed within range as investors are awaiting a weekend meeting of European leaders for signs of progress in resolving the region’s debt crisis.

Gold and copper rebounded from the sharp falls of Thursday.

From news.yahoo.com:

European leaders said they did not expect Sunday’s meeting to give an all-cure solution to the euro zone‘s debt problems, with regional leaders still sharply divided over how to strengthen a euro zone rescue fund.

France and Germany said in a joint statement on Thursday that the leaders will discuss in detail a comprehensive solution to the euro zone crisis at the summit on Sunday but no decisions will be adopted before a second meeting to be held by Wednesday at the latest.

Paris and Berlin wanted negotiations to start immediately with the private sector for an agreement on the sustainability of Greece’s debt, according to the communique.

“Assets across the board are coming under pressure as it becomes clear that European banks, when faced with a stress test, will likely reduce their assets to strengthen their capital,” said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory Co.

Tags: debt crisis, euro zone

Asian stock markets rose on Wednesday with investors emboldened by reports that France and Germany were moving closer toward resolving debt crisis of Europe through a massive expansion of the region’s bailout fund.

The dollar was lower against the euro and the yen, and oil prices hovered above $88 per barrel.

From in.news.yahoo.com:

Japan’s Nikkei 225 index rose 0.1 percent to 8,749.74 and Hong Kong’s Hang Seng was 1.3 percent higher at 18,302.83. South Korea’s Kospi was marginally lower at 1,837.74. Benchmarks in Singapore, Australia, India and Indonesia were higher. Those in Taiwan, Malaysia and Thailand fell.

The Guardian newspaper reported that France and Germany have agreed to expand the rescue fund for nations using the euro common currency to euros 2 trillion ($2.74 trillion). The paper cited unnamed European diplomats and said European officials are expected to take up the expansion along with a package of other measures at a meeting this weekend.

“Following recent volatility, it is unlikely that we will see quite as big a rally locally as our U.S. peers today. Particularly at the retail end of the market, investors will probably wait to see successive gains before rushing back into the market,” Stan Shamu of IG Markets in Melbourne said in a research note.

Tags: bailout fund, debt crisis, stock markets

After euro zone policymakers moved to shore up struggling banks and fend off a financial crisis, Asian stocks rose on Friday and the euro clung to gains from a 2-cent rally.

On Thursday, the European Central Bank (ECB) announced aggressive liquidity measures to throw a lifeline to lenders who have seen wholesale funding drying up as market confidence ebbed, and the European Union said it would present a plan for a coordinated recapitalization of banks by member states.

From in.finance.yahoo.com:

Gold, oil, copper and equities were all on course to post weekly gains on hopes that Europe’s leaders may finally be getting to grips with a two-year-old sovereign debt crisis, although the scale of the task meant caution remained high.

“There are still plenty of problems that face the European financial system,” said Greg Gibbs, strategist at RBS in Sydney. “The risk rally will probably run out to steam in the next week.”

Fears that the crisis is heading inexorably towards a default by Greece — and possibly others — that could trigger turmoil in the banking system have caused a sharp sell-off in riskier assets since late July.

U.S. stocks rose more that 1.5 percent on Thursday and S&P 500 index futures traded in Asia were mildly negative. “No one wants to take a big position ahead of the U.S. jobs report later in case there is a downside surprise,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Tokyo.

Tags: debt crisis, euro zone, liquidity measures

The world’s No.3 PC brand, Lenovo Group Ltd, has reported a near doubling of its first-quarter net profit to beat expectations, thanks to acquisitions and growth in key emerging markets such as China.

The world’s No. 2 PC maker, Dell, slashed its 2012 revenue forecast because of an already weak outlook for technology spending this year worsened.

From in.finance.yahoo.com:

Lenovo, the most well-known Chinese PC brand, is trying to grab more market share in its mainstay PC business, a sector whose growth has been stunted by handheld gadgets that allow users to make calls, surf the Internet and check emails.

“Although the worldwide PC market has shown marginal improvement and returned to growth during the fiscal quarter one, challenges to worldwide PC demand remain such as the pace of global economic recovery and the on-going debt crisis in Western Europe,” Lenovo said in a statement.

Net profit of Lenovo was $108.8 million for the quarter ended June, up from a revised $54.9 million a year earlier.

Tags: debt crisis, dell, economic recovery, emerging markets, Lenovo

Brent crude oil fell below $115 a barrel on Monday and headed for its first monthly decline this year, as investors weighed the prospect that the debt crisis of Europe and a sputtering U.S. economy may slow demand.

The trading volume was kept at less than 5 percent in daily norm due to public holidays in the United States and the UK on Monday.

From in.finance.yahoo.com:

Brent crude slipped 35 or 0.3 percent cents to $114.54 a barrel by 2022 GMT, having held above the first technical support level of $114. Prices are down 9 percent for the month of May, the biggest decline since May of last year.

U.S. crude dropped 21 cents to $100.38 in late trading. The New York Mercantile Exchange will not issue a settlement price on Monday, with all trading registered for May 31.

“Trading volume is very thin with the UK and U.S. markets not in. The only factor that I can see is a slightly firmer U.S. dollar, which may put pressure on prices,” said Carsten Fritsch, analyst at Commerzbank.

Chairman of euro zone finance ministers, Jean-Claude Juncker, expressed optimism over further aid to Athens after meeting with French President Nicolas Sarkozy in Paris as the European Union raced to draft a second bailout package for Greece to avert the risk of a defult.

The euro eased on Monday while the dollar stabilized following a slide late last week.

Tags: Brent crude, debt crisis, New York Mercantile Exchange, trading volume

More and more countries are retreating from some free market rules guiding international trade in recent decades and have started playing by Chinese rules.

Brazil and Japan have already taken measures or at least prevented them from appreciating any further against the Chinese currency in an attempt to devaluate their currencies.

From NYTimes.com:

In Europe, policy makers have begun to fret that, despite the debt crisis that sent investors fleeing just a few months ago, the euro  has now risen sharply again against the dollar, potentially weakening exports by making European goods more expensive. Those exports have been one of Europe’s few sources of growth, and President Nicolas Sarkozy of France, who will take over leadership of the Group of 20  biggest economies, said over the weekend that he was pushing for a new system of coordinating global currencies as wealthy nations did in the 1970s, before a free market orthodoxy took hold.

It is unclear if the result will be a “currency war,” as Brazil’s finance minister recently warned, or if these are just warning shots, fired to force Beijing’s leadership to make good on years of promises that it would allow the value of its currency to appreciate.

But that question is so in the air that Treasury Secretary Timothy F. Geithner felt compelled last week to try to dampen the fear. “We’re not going to have a trade war,” he said at a forum sponsored by The Atlantic. “We’re not going to have currency wars.” He acknowledged that the only way to break the cycle was for a country “to decide it is in its own interest to allow its currency to appreciate in response to market forces,” and he said he believed that a “substantial fraction of the Chinese leadership” now understands the need to allow the currency to rise in value.

The rest of the world has started showing signs of mimicking the art of manipulating currencies for national advantage, while resisting political pressure from trading partners, like China and many more are expected to join the league in coming years.

Tags: Chinese currency, debt crisis, free market, international trade