A European Union financial stability fund with the potential to raise up to 440 billion euros ($580.7 billion) to help countries weather debt problems is now fully operational, officials said on Friday.
Third quarter euro zone economic data has been surprisingly strong so far but the European Central Bank still expects the bloc's economic recovery to be moderate and uneven, President Jean-Claude Trichet said on Thursday.
The dollar fell versus the Japanese yen on Wednesday as a weaker-than-expected reading on new orders for U.S. durable goods added to fears about the U.S. economic outlook.
Demand for the dollar also fell against the euro as investors awaited for more supportive news for the euro, which rose above $1.30 but has been stuck in a range recently.
EU tests of banks' ability to withstand financial shocks, criticized as too easy after only 7 out of 91 failed, face their own stress test in the markets on Monday with early signs pointing to a more positive response.
Euro zone member Slovakia will have strong reasons to reconsider its help to indebted euro group member Greece, the Eurogroup Chairman Jean-Claude Juncker was quoted as saying.
Seven European banks are not strong enough to withstand another recession and would face a capital shortfall of 3.5 billion euros ($4.5 billion), far less than expected, stoking fears the keenly-awaited stress tests were too soft.
The Bank of Canada raised its key interest rate by 25 basis points to 0.75 percent on Tuesday, as expected, but cautioned that the domestic and global recoveries will be slower than previously expected in a hint that any further hikes may be gradual.
European governments must press ahead with deficit cuts to restore investor confidence even if it means economic growth suffers, European Central Bank Governing Council member Christian Noyer said on Monday.
The euro hovered near a two-month high against the dollar on Monday, rebounding from lows hit after a downgrade of Ireland's sovereign ratings, as investors awaited results of European banks' stress tests.
Europe Union finance ministers remained divided on Tuesday over what data would be published in banks stress tests due in 10 days but pledged to make them as transparent as possible.
A leading EU official on Tuesday urged full disclosure on how the region's banks perform in stress tests, but sources said the bloc's finance ministers remained divided on what data should be published.
Account holders in the European Union who are faced with a run on their bank would get their money back within a week under a draft EU law published on Monday to protect consumers in the wake of the global crisis.
The European Central Bank slowed the pace of its controversial buying of government bonds to a near halt last week, adding substance to suggestions from one of its top policymakers that the programme could soon be phased out.
The euro fell against the dollar on Monday, pulling back from a two-month high, with investors betting recent gains were too far, too fast as upcoming results of stress tests on European banks loom.
Some in the market said the euro had been knocked by a weekend German magazine report that the stress tests would include loan markdowns on German sovereign debt under certain conditions, countering reports last week that the tests would exempt German haircuts.
Proposals being discussed by Europe's top banks to create a bailout fund should not exclude the wider financial system from contributing to rescues, the EU's financial services chief said on Monday.
European finance ministers will shift their focus next week onto a possible need for banks to raise more capital and on who will cover any shortfalls exposed by stress tests -- a sum which Credit Suisse estimated could reach 90 billion euros ($114 billion).
European shares gained ground on Thursday with investors scooping up battered banking stock as details of the sector's stress tests started to emerge, adding to a tentative recovery from a sharp two-week sell-off.
Interbank euro funding costs rose on Thursday and could shift if European Central Bank chief Jean-Claude Trichet surprises with plans for more liquidity provision or news on bank stress tests.
Trichet was due to begin a news conference at 1230 GMT after the bank held interest rates at 1 percent, as expected.
In an effort to reassure financial markets about the health of the European Union's banking system, the bloc's countries will stress-test a large number of their banks and publish the results.
The European Central Bank will face pressure on Thursday to say whether Europe-wide stress tests on banks will be tough enough to convince markets of their worth but is likely to offer little beyond soothing words.
The euro hit a two-month high against the dollar on Thursday after strong Australian jobs data boosted higher-risk currencies, while investors awaited comments from the European Central Bank on bank stress tests.
European regulators haggled over how much detail to reveal about health checks on the region's lenders in a fight that may undermine the exercise's aim of restoring confidence.
