The European Central Bank will hand out bundles of cheap three-year money to the region's battered banks nest week but the response to its offer of unlimited funds may not bring markets much festive cheer.
Europe's intensifying debt crisis has forced the ECB to extend and expand support measures for banks in the euro area which have found it harder to borrow in the interbank market due to their large sovereign debt exposures. A rush by them to borrow the new money could underscore the scale of the problem.
Is a lot of money enough to be reassuring, or will it scare the living daylights out of people? said Nick Parsons of National Australia Bank, who readily admits to not knowing the answer.
Other events that could spoil any holiday mood include a possible meeting of euro zone finance ministers to discuss developments since the recent EU leaders summit, and ECB President Mario Draghi's address to the European parliament on December 19.
The week is set to be light on the data front, with most interest in Germany's year-end Ifo sentiment index, which is expected to confirm a weaker economy but reveal enough consumer confidence to ensure no recession.
Estimates vary about how much money banks will want at the ECB tender on December 21, but a big take up is seen as most likely. This view was bolstered by the results of Thursday's Spanish debt auction where the government sold almost twice as many bonds as it was targeting.
Banks can give their Spanish bonds to the ECB next week in return for low cost three-year loans, and make money on the difference between the interest rate they get from Spain and what they pay to central bank.
Spain sold 2.45 billion euros of four-year bonds at the auction with an average yield of 4.02 percent.
Politicians, including French President Nicolas Sarkozy, are hoping this ECB money, and the looser collateral requirements that were also announced, will be enough to convince banks to keep buying peripheral euro zone states' high-yielding bonds and so prevent any worsening of the two-year-old debt crisis.
But many analysts question why banks, among the big sellers of government bonds over the last couple of years, would want to rebuild sovereign debt holdings now, particularly given the pressing need to rebuild their capital bases.
It may not become clear next week whether the increased funding and easier capital requirements are a game-changer for the debt crisis as the seasonal lack of liquidity makes drawing instant conclusions dangerous, says NAB's Parsons, who is head of market strategy for Europe.
The coming week is the last full trading week of the year and liquidity is going to be thin, with many investors already sidelined by the volatility in markets during December.
We've seen a lot of clients sitting on their hands waiting for the news flow to improve, said Graham Bishop, European equity market strategist at RBS.
Markets are also watching nervously to see if ratings agency Standard & Poor's follows up on its threat to downgrade some or all of 15 euro zone sovereigns after last week's EU leaders summit, which was widely seen to have failed to address current funding pressures in the debt markets.
Investors will otherwise be taking stock of their returns for the year, with holders of U.S. Treasury and German government 10-year bonds enjoying a stellar performance. Returns for the year to date show gains of about 16.5 percent on the T-notes and 12.5 percent on the Bunds.
That contrasts with a fall of about 12 percent in the MSCI world equity index <.MIWD00000PUS> following its 10.4 percent rise in 2010.
In Europe, the benchmark Stoxx Europe 600 index <.STOXX> has slumped about 14.7 percent so far in 2011 compared with a rise of 8.6 percent last year, while the FTSEurofirst300 <.FTEU3> is down around 14.1 percent versus 2010's 7.3 percent gain.
Reuters will publish a global asset allocation poll on Monday to reveal how investors are positioned heading into what is likely to be a confusing and volatile new year.
The equivalent poll this time a year ago found investors entering 2011 in a relatively bullish mood, raising equity holdings to a 10-month high, increasing exposure to high-yield credit and cutting back on government debt
What a difference a year makes.
(Editing by Catherine Evans)