LONDON (Reuters) – World stock, commodity and currency markets were steady on Monday, as the holiday lull set in across markets and offset tensions over the U.S. budget dispute.

With only UK, French, Dutch and Spanish stock markets open in Europe and trading shortened ahead of Christmas celebrations, the FTSEurofirst300 opened almost flat at 1138.35 points to leave the MSCI index of global stocks virtually unchanged at 339.87.

Activity in other assets was also subdued, with spot gold steadying as investors took to the sidelines, while Brent oil eased 0.3 percent to $108.63.

Financial markets are also in limbo over $600 billion of U.S. spending cuts and tax hikes that kick in next month and threaten to hurt the economy. Lawmakers and President Barack Obama have abandoned talks to prevent this “fiscal cliff” until after Christmas.

“It’s all about the U.S. fiscal cliff issue,” said Victor Shum, managing director at IHS Purvin & Gertz.

“The chances are that we will get a deal between the White House and the Republicans, but the fact that (House of Representatives speaker John) Boehner failed to get members to support his plan is worrying.”

In Asia, MSCI‘s broadest index of Asia-Pacific shares outside Japan inched up 0.1 percent in thin trading after falling to a near two-week low on Friday.

Japanese financial markets are closed for a public holiday and will resume trading on Tuesday. Most European bond markets were also shut.

In the currency market, the dollar eased 0.1 percent versus a basket of major currencies, while the euro was steady at around $1.3196.

The yen, however, neared a 20-month low versus the dollar after incoming premier Shinzo Abe renewed pressure over the weekend on the Bank of Japan to adopt a 2 percent inflation target.

(Additional reporting by Masayuki Kitano and Manash Goswami in Singapore; Editing by Anna Willard)

LONDON (Reuters) – Global stock markets weakened on Friday and both the euro and gold slipped, as a new setback in talks to avert a U.S. fiscal crisis and evidence of Europe‘s ongoing economic difficulties stoked investor nerves.

A proposal from Republican leader John Boehner to avoid the so-called fiscal cliff failed to get support from his party on Thursday, casting fresh uncertainty over talks to avoid across-the-board tax hikes and spending cuts that could push the U.S. economy into recession in 2013.

Anxiety was exacerbated by weaker-than-expected data from key corners of Europe, as German consumer morale dropped to its lowest level in more than a year, Britain revised down growth figures and Sweden slashed its economic forecasts.

The worries prompted widespread selling in most major stock markets and saw investors head for traditional safe-haven assets.

The dollar and yen and U.S. and German Government bonds all rose as falls in London , Paris and Frankfurt pushed the FTSEurofirst 300 index of top European stocks and MSCI’s global index down 0.6 and 0.4 percent respectively.

“Risk assets look vulnerable over the holiday trading period. The recent performance of key benchmarks has priced in a satisfactory outcome to the U.S. fiscal discussions, which is far from a done deal,” said Peel Hunt strategist Ian Williams.

Futures prices also pointed to sharp falls when trading resumes on Wall Street later. Oil and gold too were caught up in the U.S. disappointment.

Brent crude oil fell more than $1 per barrel towards $109 and bullion slipped $1.38 an ounce to a near four-month low and on track for its steepest weekly drop since June.

“The market volume is thin amidst all these uncertainties, and the year is coming to an end. Many of the investors prefer to take profits and just leave the market,” said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore.

CLIFF HANGER

In currency markets, the yen firmed and the highly liquid U.S. dollar rose 0.2 percent against a basket of key currencies.

At the same time, concerns over the U.S. impasse dented demand for so-called high-beta currencies that tend to rise or fall with the global growth outlook, such as the Australian dollar and euro.

The weaker German data, which saw consumer confidence unexpectedly drop for a fourth month running, kept downward pressure on the euro which retreated further from a 8-1/2 month high hit earlier in the week, to stand at $1.3214.

“This is a classic risk-off trading environment where the yen did best, followed by the dollar, and higher-beta currencies underperformed,” said Audrey Childe-Freeman, head of FX strategy at BMO Capital Markets.

“We have had a very good run in the euro and what we are seeing at the moment is a little bit of profit-taking triggered by disappointment in the fiscal cliff discussions.”

Caution also prevailed in Europe’s bond markets, where German government bonds climbed at the expense of recently resurgent euro zone periphery debt.

Other safe-haven bonds followed the trend, with U.S. 10-year Treasury yields dipping from an 8-week high hit this week to 1.74 percent and 10-year Japanese yields inching down 0.765 percent.

Jim Barnes, senior fixed income manager at National Penn Investors Trust Co. in Wyomissing, Pennsylvania, saw Treasuries continuing to gain once U.S. markets open later, but expected a correction by the end of the day.

“Treasury yields will likely fall Friday morning and will begin to reverse course in the afternoon as investors become more optimistic a deal will be reached,” Barnes said.

(Additional reporting by Emelia Sithole-Matarise, David Brett; editing by Philippa Fletcher)

NEW YORK/LONDON (Reuters) – IntercontinentalExchange agreed a $8 billion deal to buy New York Stock Exchange owner NYSE Euronext on Thursday, propelling the commodities player into the big league of European derivatives and helping it to take on arch rival CME Group.

ICE will look at selling Euronext, NYSE’s European stock market business, in an initial public offering after the deal closes in the second half of next year.

“Our transaction is responsive to the evolution of market infrastructure today and offers a range of growth opportunities,” ICE Chairman and CEO Jeff Sprecher said in a statement.

ICE will buy NYSE, which also owns derivatives market Liffe, for $33.12 per share in stock and cash, a 37 percent premium to its Wednesday closing price and valuing NYSE Euronext at $8.2 billion.

NYSE Euronext shares rose nearly 32 percent after the deal was announced, while ICE’s shares fell four percent.

Analysts said the deal will give Atlanta-based ICE a strategic boost with control of Liffe, Europe’s second-largest derivatives market, helping it compete against U.S.-based CME Group Inc, owner of the Chicago Board of Trade.

“ICE is after Liffe, that is the crown jewel of NYSE Euronext,” said Peter Lenardos, analyst at RBC Capital Markets.

“Strategically it makes sense for ICE to enter the European derivatives space in a meaningful way.”

ICE, founded in 2000, has its roots in electronic commodity trading and a tie-up with Liffe will boost trade for soft commodities such as sugar, buoying its profits.

“I would imagine that, having the softs contracts under one roof, would provide for easier arbitrage, financing and development of trading opportunities behind the contracts, via swaps and options,” said Jonathan Kingsman, a sugar trade veteran who heads agriculture at information provider Platts.

“If you have clearing membership of ICE, you could trade London contracts under the same membership.”

REGULATORY THUMBS-UP

An ICE-NYSE Euronext tie-up would leap-frog Deutsche Boerse to become the world’s third-largest exchange group with a combined market value of $15.2 billion. CME Group, ICE’s largest U.S.-based rival, has a market value of $17.5 billion, Thomson Reuters data shows.

Hong Kong Exchanges and Clearing is the world’s largest exchange group with a market cap of $19.5 billion.

ICE’s main operations are in energy futures trading and unlike NYSE Euronext, it has steered clear of stocks and stock-options trading, so there is not much business overlap between the two groups, making it more likely competition authorities would approve a tie-up, analysts said.

Last year, the U.S. Justice Department blocked a $11 billion joint hostile bid by ICE and Nasdaq OMX Group for NYSE Euronext on concerns the tie-up would dominate U.S. stock listings.

If that bid had succeeded, ICE planned to buy NYSE Euronext derivatives business while Nasdaq would have taken control of the stock exchanges.

A rival $9.3 billion bid by German exchange operator Deutsche Boerse also fell foul of regulators.

“I doubt the competition authorities will have a problem with it, there’s only a modest overlap between the businesses,” said Richard Perrott, an analyst at Berenberg Bank.

“The rationale for the deal will be the same as that with Deutsche Boerse – migrate the clearing of Liffe derivatives to ICE’s services in London and scale up to attract OTC (Over The Counter) derivatives clearing.”

ICE said it expected to achieve $450 million in cost savings from the deal.

Before the latest ICE offer emerged, NYSE Euronext’s shares had fallen by nearly a third since ICE and Nasdaq launched their thwarted joint bid.

The New York Stock Exchange, known as the Big Board and the symbol of U.S. capitalism, has seen its clout fade as new technology and the rise of private trading venues run by Wall Street banks and brokers cut its margins.

ICE, which started out as an online marketplace for energy trading, is the product of a string of acquisitions from the London-based International Petroleum Exchange in 2001, to the New York Board of Trade and, most recently, a handful of smaller deals, including a climate exchange and a stake in a Brazilian clearing house.

(Additional reporting by Luke Jeffs and David Bough in London. Writing by Carmel Crimmins; Editing by Helen Massy-Beresford)

LONDON (Reuters) – World shares hit 17-month highs and the euro surged on Wednesday on hopes that U.S. politicians will reach a budget deal and that further monetary stimulus will come from Japan.

European shares extended their recent rally in early trading with the FTSEurofirst 300 index near an 18-month high ahead of the German Ifo survey, which is likely to point to a gradual improvement in business conditions for December.

“What is important, and what is driving the market higher, is that the two parties (in the U.S.) are now in constructive discussions over specific tax levels and spending programs, and working towards a common middle ground,” said Cameron Peacock, a strategist at IG Markets.

MSCI’s world equity index , which is in its fifth week of gains, was up 0.3 percent at 342.29 points – a level which surpasses its peaks for this year and has not been seen since July 2011.

In Europe London’s FTSE 100 , Frankfurt’s DAX and France’s CAC-40 indexes all rose around 0.3 percent in early trading.

Behind the rally is a view that, once the U.S. fiscal crisis is resolved, the massive monetary stimulus by the world’s top central banks will lead to an expansion in economic growth for 2013, supporting equities at the expense of safe-haven bonds.

The Bank of Japan is widely expected to join in the growing activism of central banks to support growth by expanding its asset-buying program aggressively an the end of a two-day policy meeting on Thursday.

The prospect of extra stimulus sent Tokyo’s Nikkei share average up 2.4 percent on Wednesday and back through the 10,000 points for the first time since April.

The easier policy outlook also sent the yen to a 16-month low against the euro, while the dollar gained 0.2 percent on the Japanese currency to edge back towards its strongest level in 20-months of 84.48 yen hit on Monday.

The growing demand for riskier assets on the hopes for a U.S. budget deal also benefited the euro against the dollar and it touched a 7-1/2-month high of $1.3256.

“Unless U.S. fiscal cliff talks take an unexpected turn for the worse, we believe that EUR/USD will meet our 1.33 year-end target,” analysts at BNP Paribas wrote in a note.

Commodities were in consolidation mode, however, as investors waited for a U.S. fiscal deal.

Oil held steady, with Brent crude rising about 10 cents to be just short of $109 a barrel at $108.80, and U.S. crude was little changed below $88 a barrel.

Copper was also flat at $8,017 a tonne. Copper has rallied almost 8 percent from mid-November and hit a two-month high a week ago, but has since lost some ground.

Gold rose 0.3 percent to around $1,675 an ounce, after falling to $1,661.01 on Tuesday, its lowest since August.

(Editing by Anna Willard)

LONDON (Reuters) – Global shares and other risk assets rose on Tuesday, encouraged by signs of a U.S. budget compromise aimed at stopping a package of tax hikes and spending cuts hurting the economy next year.

The differences over how to resolve the “fiscal cliff” narrowed significantly on Monday night when the White House proposed leaving lower tax rates in place for everyone earning under $400,000.

That was a change of position for President Barack Obama who has been pushing for a $250,000 threshold although it is still far from Republican House of Representatives Speaker John Boehner‘s preference of $1 million.

“Overnight news on the fiscal cliff has been taken positively by the markets here in Europe after underperforming the U.S. recently,” Securequity sales trader Jawaid Afsar said.

European shares mirrored an upward push by Asian equities, opening up 0.5 percent as London’s FTSE 100 , Paris’s CAC-40 and Frankfurt’s DAX climbed between 0.4 and 0.5 percent.

It left the MSCI index of global stocks 0.2 percent higher, on the cusp of a three-month high and with a more significant 1-1/2 year high also in its sights.

Futures suggested a higher Wall Street opening too and oil, copper and gold also firmed. Expectations of more monetary easing in Japan kept the yen soft, however.

As European trading gather pace, the dollar inched up 0.1 percent to 83.96 yen, off a 20-month high of 84.48 yen hit on Monday but well above its late New York levels on Friday. The euro hovered at $1.3158.

Concerns that fiscal stimulus could seriously increase the country’s debt burden pushed the benchmark 10-year Japanese government bond yield to a one-month high of 0.750 percent.

In European bond markets, trading remained subdued ahead of the year-end. German Bund futures slipped to 144.62 as increasing signs of progress in the U.S. budget talks eased demand for low-risk assets.

“We’re lower on the fiscal cliff progress. The markets are very thin out there and so price moves could get overdone today,” said one bond trader.

(Additional reporting by David Brett; William James; editing by Anna Willard)

LONDON (Reuters) – Weaker-than-expected European economic data sent the region’s shares and the euro into reverse on Friday, as hopes of a quick recovery by the struggling bloc were left looking fragile.

Disappointing German manufacturing sector figures overshadowed a small pick-up in the wider euro zone purchasing manager index, data which polls around 5,000 businesses across the 17-nation bloc and is viewed as a reliable growth indicator.

The German manufacturing sector slipped to 46.3 in December from 46.8 the previous month, remaining well below the 50 threshold that divides growth from contraction and missing the consensus forecast in a Reuters poll for 47.2.

It saw European shares drop back to a near-flat 2628.56 points. By 4:30 a.m. ET London’s FTSE 100 , Paris’s CAC-40 and Frankfurt’s DAX were down between 0.1 and 0.2 percent having all opened in positive territory.

“All in all, the picture for the EMU (euro zone) economy has not changed much after today’s data,” said Annalisa Piazza, an economist at Newedge Strategy.

“EMU GDP is expected to continue to contract in Q4-12 and there are no signs of improvement for the first part of next year.”

Following a mixed session for Asian equities, the MSCI index of global stocks was down fractionally at 336.73 points, following a 6 percent rise over the last three weeks.

In the currency market, the PMI data also saw the euro lose its early momentum and slide back below $1.31.

Mirroring the move, German government bonds clawed back into the black having dipped during early trading. By 4:20 a.m. ET German bunds were up 4 ticks at 145.11.

The news was not all gloomy, however. After more than eight hours of late-night talks at a summit in Brussels, EU leaders promised to push ahead with a pan-euro zone mechanism to wind down problem banks.

It is something many crisis observers believe could help finally break the toxic link between troubled banks and the crippling impact their bailouts typically have on national finances.

A deteriorating business sentiment survey and expectations that the Bank of Japan will ease policy further to support the weak economy next week pushed the yen to a near 9-month low against the dollar and an 8-month low against the euro.

China shares outperformed Asian peers after the HSBC flash purchasing managers’ index for December hit a 14-month high of 50.9, the fifth straight monthly gain, underlining the world number two economy’s improving growth prospects.

The data help lift commodity markets, with copper and oil both edging up, albeit staying within their tight recent ranges.

“We’re seeing positive (China) PMI, industrial data and they are all pointing to the direction of an economic recovery,” said Sijin Cheng, a commodities analyst at Barclays Capital.

(Additional reporting by Sudip Kar-Gupta; editing by Philippa Fletcher)

LONDON (Reuters) – Swiss bank UBS faces a combined fine of about $1 billion to settle charges of rigging the Libor interest rate benchmark early next week, a person familiar with the situation said on Thursday.

“The global settlement is about $1 billion. It’s expected early next week, on Monday or Tuesday,” the source said.

UBS declined to comment.

(Reporting by Huw Jones, editing by Steve Slater)

LONDON (Reuters) – The number of Britons claiming unemployment benefits fell unexpectedly in November and the number of people in work hit a record high, data showed, raising prospects the labor market will support a moribund economy.

The data will give some relief to the government and policymakers struggling with an economy that only exited recession in the third quarter. Weak business surveys have raised concerns of a relapse.

“The fact that UK employment is rising, consumer confidence is up, and anecdotal evidence of retail sales haven’t been too bad, offers some hope that the domestic situation in the UK is stabilizing,” said James Knightley at ING.

Sterling hit a five-week high versus the dollar after the data of above $1.6133. London’s FTSE 100 index remained 0.3 percent higher on the day but there was no reaction on gilt markets.

The number of people claiming jobless benefits fell by 3,000 last month and the increase in the previous month was revised down to 6,000 from 10,100, the Office for National Statistics said on Wednesday. Analysts had forecast a rise of 7,000.

On the wider ILO measure, the number of people without a job fell by 82,000 in the three months through October to 2.510 million, the lowest since March-May 2011. The jobless rate stayed at 7.8 percent, in line with forecasts.

“This is a good set of figures. What we’ve seen is extraordinary resilience by the private sector,” Employment Minister Mark Hoban told Sky TV after the release.

Recent business surveys have showed that firms in Britain’s dominant service sector increased staffing levels last month but factories reduced headcount.

A separate survey published on Monday showed British firms hired permanent staff through recruitment agencies at the fastest rate since April 2011 last month.

The number of people in work rose to 29.601 million – the highest since records began in 1971.

The positive labor market news will come as a relief for Bank of England policymakers, who decided against another cash boost for the economy last week.

Finance minister George Osborne, who has had been under pressure to ease his flagship austerity program to reduce the budget deficit and instead stimulate growth, will be also buoyed by the data.

The ONS said the number of public-sector employees fell by 24,000 in the third quarter to 5.745 million – the lowest since the first quarter of 2002. The ONS also revised public-sector employment up by around 100,000 per quarter for recent quarters and by less for earlier years due to better data.

Britain will endure more austerity and miss a key debt-cutting goal as the economy looks set to grow far more slowly than previously thought, Osborne said last week when presenting a half-yearly budget statement to parliament.

The latest ONS data also showed that many Britons still faced a squeeze on their finances.

Average weekly earnings including bonuses grew by 1.8 percent in the three months through October. Analysts had forecast a rise of 1.9 percent. Excluding bonuses, pay increase by 1.7 percent.

Both figures were below inflation, which jumped to 2.7 percent in October.

“Such a picture is not supportive for the spending profile in the coming months as households remain under pressure in the current uncertain environment, even if labor markets remain resilient,” said Annalisa Piazza at Newedge Strategy.

(Reporting by Olesya Dmitracova and Jonathan Cable; Editing by Jeremy Gaunt)

LONDON (Reuters) – European shares and the euro edged higher on Wednesday supported by expectations of more monetary stimulus from the U.S. Federal Reserve when it ends its two-day policy meeting later in the day.

Oil, copper and gold prices were also underpinned by the talk as well as by recent positive economic data from Europe and the United States, while the dollar hovered near multi-month lows against higher yielding currencies.

Markets expect the Fed to expand its current asset purchase scheme, committing to buy $45 billion of U.S. debt and extend its purchases of mortgage-backed debt, to help sustain the fragile U.S. economic recovery.

“We think that more quantitative easing is coming and this next round will be the most aggressive yet,” said Ralf Preusser, head of European rates research at BofA Merrill Lynch Global Research.

European shares were on course for an eighth straight day of gain ahead of the Fed decision, which is due after markets in the region close, though the FTSEurofirst 300 index was barely changed in early trading after hitting an 18-month high on Tuesday.

London’s FTSE 100 , Paris’s CAC-40 and Frankfurt’s DAX all opened little changed from the previous day’s level, while a 0.1 percent drop in U.S. stock futures hinted at a soft Wall Street open.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.5 percent to hit a fresh 16-month peak, helping push the MSCI world equity index up 0.1 percent to 337.36 points.

The euro pulled further away from a two-week low of around $1.2876 seen on Friday and stood at $1.3001, hanging on to the gains made after Tuesday’s surprisingly strong ZEW economic sentiment index in Germany.

The dollar stood at 80.05 against a basket of major currencies , barely changed from late U.S. levels on Tuesday, but against higher yielding units like the Australian, New Zealand and Canadian dollars, it was drifting lower..

London copper was up 0.5 percent at $8,139.75 a metric ton (1.1023 tons), near two-month highs, while spot gold inched up 0.1 percent to $1,713.15 an ounce.

Brent crude traded above $108 a barrel as the Organization of the Petroleum Exporting Countries (OPEC) prepared to meet in Vienna where it was widely expected to retain its output target of 30 million barrels per day.

Brent futures were up 33 cents at $108.33 a barrel while U.S. crude was 21 cents higher at $85.99 a barrel.

(Reporting by Richard Hubbard. Editing by Alastair Macdonald)

LONDON (Reuters) – Virgin Atlantic will form a joint venture on transatlantic flights with Delta Air Lines if the U.S. carrier buys Singapore Airlines‘ 49 percent stake in the UK airline, a source close to Virgin said.

The source said Virgin founder Richard Branson was not immediately looking to sell any of his 51 percent stake in the UK airline and was “concentrating on working with Delta” which is closing in on agreeing a deal to buy Singapore’s stake.

Delta and Virgin plan to set up a revenue-sharing deal on flights between Britain and the U.S., which would involve a code-share agreement, allowing both to sell flights on the other airline and share revenues from ticket sales, the source said.

The joint venture could eventually lead to the pair sharing costs and bringing their prices and schedules into line, the source added.

The partnership would be similar to that operated by IAG’s British Airways (BA) and American Airlines since 2010 on all transatlantic flights on routes between the U.S., Canada and Mexico and many European routes.

Airlines like Delta have long hoped to break into London’s capacity-constrained Heathrow airport, a lucrative hub for corporate passengers where landing slots are generally hard to acquire. Virgin Atlantic is the second-largest carrier at Heathrow after BA.

A combination with Delta, the second-largest U.S. airline by revenue after United Continental , would be a shot in the arm for Virgin. The British carrier has been battered by rising fuel prices and the euro zone crisis, and posted a loss of around 80 million pounds ($128.16 million)in its last full year.

Singapore and Delta are still in talks over the sale of the stake, which the Asian carrier bought for 600 million pounds in 1999, but now wants to sell to refocus on its key markets.

Weekend reports in the British press said Air France-KLM , which also has a partnership with Delta on some transatlantic routes, was in talks to buy part of Branson’s stake – a deal which would effectively give Delta and Air France-KLM control over Virgin Atlantic.

However, Branson is unlikely to sell down his stake in the near future, the source added.

Branson, who set up Virgin Atlantic in 1984, has been weighing the airline’s future for years and two years ago appointed Deutsche Bank to examine offers.

Earlier this month sources told Reuters that Delta was keen to see Air France-KLM – a member of its SkyTeam alliance – buy a stake in Virgin to give the pair control of the British airline’s operations.

The European Union requires that EU carriers be under European control, meaning Delta would need an EU airline as a partner if it wanted majority control of Virgin Atlantic.

If Air France-KLM were to buy a small percentage of Branson’s stake, then Virgin Atlantic could continue to be European controlled.

(Editing by Rosalba O’Brien and Hans-Juergen Peters)