European Banks Weigh on Markets Yet Upbeat US Data Support Confidence

Broad markers reversed losses as investors await some important economic data from the US expected to signal that the world’s largest economy is recovering which improved the traders sentiment and increased their appetite for risk.

The ECB said yesterday that 523 European banks took a record 489 billion euros of funds, which raised fears over how dependent is the banking sector on the central bank, triggering sharp sell-offs.

Yet as consumer confidence might improve this month in theUS, while the growth may hold still at 2.0% in Q3 and the jobless claim may remain under 400 K last week, sentiment started improving as theUSis signaling recovery.

Markets will also eye today Italy’s confidence vote on the 33-billion-euro austerity package and ECB’s president Mario Draghi’s speech in Frankfurt, as he might confirm the “substantial downside risks” to the economy by the debt crisis.

In Asia stocks fell today on fears from European banks, where Nikkei 225 fell 0.77% and Hang Seng fell 0.21%, yet in Europe DAX rose 1.41% and CAC40 rose 1.31% as confidence found support from theUSupbeat data.

As risk appetite improved, the USD was dragged down trading around the 79.70 level from the opening at 79.97, while the euro is trading with bullish momentum rising as much at 1.3099 from the opening at 1.3045.

The GBP found additional support today from the better than expected GDP report indicated the economy grew 0.6% in Q3, while business investments rose 0.3%, trading as of this writing around the 1.5715 level from the opening 1.5673.

The AUD gained as well trading around the 1.0137, while the yen is almost unchanged at 78.06. Despite of the dollar’s losses, gold is almost unchanged on Europe’s debt worries, trading around the $1613.00 level.

Crude oil however is moving with bullish momentum above the $99.00 per barrel level after oil inventories in the US fell yesterday according to the EIA report by the most since Feb. 16, 2001.