Europe's attempt to restore confidence in its banks comes to a head on Friday with widespread expectation that up to 10 lenders will fail the test and have to raise capital.
Gold this week received a blow from some unexpected quarters. During the past few weeks, the driving force behind gold has been the Euro zone economic crisis. First it came from Greece then Portugal crisis helped the yellow metal gain and cross $1,200 per ounce mark and in a latest development, the Ireland financial woes boosted the gold prices.
Crude drifted lower after hitting a three-month high near $80 on Friday, supported by a storm threat to U.S. Gulf oil installations but pressured by uncertainty over the result of bank stress tests in Europe.
By 0943 GMT (5:43 a.m. EDT), U.S. crude for September was trading 26 cents lower at $79.04 a barrel. ICE Brent crude futures were 28 cents down at $77.54.
Ten out of the 91 banks subjected to Europe's stress tests are expected to fail, according to a survey of investors conducted by Goldman Sachs.
Several of Spain's 18 savings banks, including some that have been involved in recent mergers, have failed tests to see how they would cope with worsened economic conditions, a newspaper reported on Friday.
The euro rose on Friday after a survey showed German business sentiment posted a record jump in July to its highest level in three years, and corporate results lifted stocks ahead of European bank stress tests results.
The euro hit the day's high against the dollar and bund futures erased gains on Friday after a surprisingly strong reading of German business confidence.
Germany's Ifo institute said its business climate index rose to 106.2 in July, much higher than forecasts for 101.6. The business expectations index came in at 105.5 versus expectations for 101.6.
Gold prices eased in Asian trade Friday as traders await the outcome of European bank stress test.
Gold for immediate delivery was seen trading at $1194.47 an ounce at 12.00 noon Singapore time while U.S. gold futures for August delivery was at $1,194.4 an ounce on the Comex division of the NY Mercantile Exchange.
Gold slipped on Friday despite gains in equities as investors took to the sidelines before the release of European bank stress test results, which seek to restore confidence in the euro zone banking sector.
Major listed lenders are expected to pass, while the tests may show the biggest problems lie with smaller, mainly unlisted players like Germany's Landesbanks and Spain's cajas.
Oil rose on Thursday after better than expected euro zone manufacturing and services data, but rising U.S. oil inventories and fears about the broader U.S. economy, the world's largest, kept prices in check.
The euro zone's private sector surged this month, according to a survey released on Thursday, reassuring markets spooked by U.S. Federal Reserve Chairman Ben Bernanke describing the prospects for the United States as unusually uncertain.
Wal-Mart , the world's top retailer, will be ready to open hundreds of stores in India if the country opens up the sector to foreign direct investment, the chief of its Indian joint venture said.
European officials appeared to be at odds on Thursday over whether to release stress test results earlier than planned and reveal banks' exposure to sovereign debt, in a last-minute struggle over how to regain confidence in the financial sector.
Oil reversed early losses on Thursday to head back toward $77 a barrel as signs of a stronger recovery in Germany soothed investor concerns, but rising U.S. inventories kept prices in check.
With the results of stress tests on 91 European banks looming, financial institutions have been coming up with their own scenarios of what to expect.
How financial markets react to the results may well depend on the expectations currently being reached by analysts.
Connecticut's attorney general, who is leading a 37-state probe of Google Inc's collection of data from private Wi-Fi networks, asked the Internet search leader on Wednesday if it had tested the software before using it.
United Technologies Corp posted a 13.7 percent increase in quarterly profit and raised its full-year growth target for the second time this year, as its chief executive said demand was improving.
Europe's banks have been asked to estimate how much additional capital they would need under two adverse scenarios as part of stress tests aimed at reviving confidence among investors.
Asian stocks rose on Wednesday as investors cheered Apple's strong earnings and on optimism that China may roll back policy tightening measures later this year, while the euro firmed ahead of euro zone's bank stress test results late in the week.
Large commercial airplane orders stole the show at the Farnborough Airshow on Tuesday, as Airbus raised its orders guidance for the year with the help of a resurgent leasing industry.
Large commercial airplane orders stole the show at the Farnborough Airshow on Tuesday, with Latin American companies sharing the spotlight with a resurgent leasing industry.
French lawmakers began closed-door deliberation on President Nicolas Sarkozy's disputed pensions reform on Tuesday with the government saying it would accept only minor amendments.
The European Bank for Reconstruction and Development warned on Tuesday of contagion risk from a sell-off in Hungary as Budapest appeared unwilling to back down in a disagreement with lenders over fiscal reform and a bank tax.
