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Italy managed to sell all 8bn euros of the six-month government debt it auctioned on Friday, but at almost twice the rate of its previous sale. The country was forced to offer 6.5% interest on its bonds, up from 3.53% in October, a record for this length of bond in the Euro era. Meanwhile rates on Italy’s two-year government bonds climbed to over 7.8% and ten-year bonds were trading at over 7.2%. The climbing rates came in spite of rumoured ECB intervention to purchase bonds before the auction in order to keep the yields down for the sale. The auction came two days after Germany failed to sell all its ten-year bonds offered to investors.

THE EUROPEAN FINANCIAL STABILITY FACILITY may insure bonds of troubled countries with guarantees of between 20% and 30% of each issue to be determined in light of market circumstances, according to EFSF guidelines to be considered by finance ministers this week. The insurance would be in the form of tradable partial protection certificates, to be issued by an independent Luxemburg-based special purpose vehicle, the guidelines show. The step is one of several new tools including setting up private funds with investors and selling short-term debt aimed at increasing the EFSF’s power to combat the debt crisis.

MARKETS:

THE FTSE 100 snapped its worst losing run since 2003 on Friday, with miners and banks, sectors badly beaten in the previous few sessions, leading the rebound. London’s blue chips rose 37.08 points, or 0.7% to 5,164.65, ending their worst run of consecutive daily falls since January 2003. The index traded just 75% of its already anaemic average 90-day volume.

U.S. STOCKS posted seven straight sessions of losses on Friday, ending the worst week in two months, as the lack of a credible solution to Europe’s debt crisis kept investors away from risky assets. Wall Street traded higher for most of the abbreviated session on hopes that “Black Friday,” the traditional start of the U.S holiday shopping season, would support major retailers. But gains were quickly offset by headlines out of Europe that further dented market sentiment. For the week, the S&P 500 fell 4.7%, giving back almost two-thirds of its gains in October, the market’s best month in 20 years. The Dow was off 4.8% for the week and the Nasdaq fell 5.1%.

CURRENCIES:

THE EURO slid for a fourth week, its longest losing streak versus the dollar in 18 months, as Germany’s struggle with a bond auction signalled Europe’s debt crisis is touching the region’s most fiscally sound nations. The 17-nation currency fell for a third week against the yen as Belgium’s credit rating was downgraded and before the nation auctions securities next week, including 10-year debt.

ENERGY:

OIL ROSE on speculation that euro- area leaders will do more to fight the debt crisis and on concern that tension in the Middle East will disrupt supply. Futures gained 0.6%, paring a second weekly loss, after Italian Prime Minister Mario Monti said that German Chancellor Angela Merkel and French President Nicolas Sarkozy would support Italy.

COMMODITIES:

GOLD traders are more bullish after investors accumulated the biggest-ever hoard of the metal, with Europe’s deepening debt crisis driving them to protect their wealth with this year’s second-best performing commodity. Traders surveyed by Bloomberg are less bullish on other commodities, anticipating declines in copper, raw sugar and corn this week. Soybeans may advance, the surveys showed.

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