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Interbank euro funding costs rose on Thursday as markets adjusted to reduced liquidity, while euribor futures fell after the European Central Bank announced no extension to its programme of unlimited liquidity operations. The European Central Bank said euro zone interest rates would be held at 1.0 percent while the Bank of England kept interest rates on hold at a record low 0.5 percent.

European supervisors shored up some confidence in the stress tests they are imposing on banks, as markets focused on finding out more detail about the process before delivering a final verdict.

European shares rose on Thursday morning, with the banking sector higher ahead of the European Central Bank's interest rate decision and its news conference likely to focus on bank stress tests. Banking stocks featured among the top performers on expectations the tests will not be as stringent as feared. Lloyds Banking Group (LLOY.L), BNP Paribas (BNPP.PA) and Barclays (BARC.L) rose 2.4-3.3 percent.

The euro pushed to a two-month high against the dollar on Thursday as short-covering kicked in after strong Australian jobs data sent the Aussie dollar up and helped gains in other currencies against the greenback and yen.

Europe listed 91 banks taking part in financial stress tests -- including many regional banks where markets suspect most of the sore spots are -- as it seeks to restore confidence in the sector.

Stress tests on European banks need to mark down the value of Greek government debt by about 16 percent, sources said, as regulators haggled over how much detail to reveal about the health checks.

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.

European regulators were debating how much detail to reveal about health checks of the region's banks on Wednesday, in a fight that may threaten to undermine the purpose of the exercise.

World stocks posted their biggest gains in a month on Tuesday after recent drubbings pushed shares to attractive levels, while the euro rose as investors waded back into risky assets.

The Australian dollar rallied on Tuesday after an upbeat assessment of the global economy by the Reserve Bank of Australia spurred appetite for high-yielding currencies, while rising risk demand also helped boost the euro.

Private payrolls rose only modestly in June and overall employment fell for the first time this year as thousands of temporary census jobs ended, showing the economic recovery failing to pick up steam.

Bank-to-bank euro funding costs rose again on Friday with the three-month rate hitting a 9-1/2 month high after central bank operations this week drained a chunk of liquidity from the market. Banks paid back 442 billion euros of one-year loans to the European Central Bank on Thursday but borrowed around 243 billion euros in six-day and three-month funds.

The dollar dipped against a basket of major currencies on Friday, extending the previous day's steep losses on concerns over the U.S. economic recovery and before the all-important June non-farm payrolls data. By 1047 GMT, the dollar index .DXY, a gauge of its performance against six other major currencies, slipped 0.2 percent to 84.539, near a two-month low after it shed 1.6 percent on Thursday.

The euro rallied to a five-week high above $1.25 on Thursday, while the dollar fell broadly after disappointing data heightened worries the U.S. economic recovery is stalling. Concerns about euro zone debt and liquidity problems eased further on Thursday after Spain successfully sold 3.5 billion euros of a five-year bond, adding to positive sentiment a day after European banks borrowed less money than expected from a European Central Bank tender.

The yen kept the euro and the Australian dollar pinned down near lows on Wednesday, after a heavy round of leveraged trade unwinding, and the euro also struggled above a record low on the safe-haven Swiss franc.

The euro and Australian dollar edged up against the yen but stayed near recent lows on Wednesday, after a heavy round of leveraged trade unwinding, while the euro was also within range of a record low on the safe-haven Swiss franc.

World stocks, commodity prices and the euro tumbled on Tuesday as risk appetite ebbed over concerns about the repayment of 442 billion euros ($545.5 billion) to the European Central Bank. Gold inched higher and U.S. Treasuries rose, pushing two-year note yields to the lowest on record, as jitters over the euro zone debt crisis supported safe-haven demand.

U.S. consumer spending rose moderately in May, even as savings touched the highest level in eight months, indicating a tepid economic recovery was still intact.

Consumer spending rose moderately in May even as savings touched the highest level in eight months, suggesting a tepid economic recovery was still intact.

U.S. Senator Blanche Lincoln credited common sense for helping forge a compromise on her proposal to force banks to spin off their swap trading operations, allowing them to retain the bulk of their books but bar them trading commodities, equity and credit default swaps.

The euro fell broadly on Friday after investors pulled back from riskier assets as share prices fell, but the market was wary of chasing prices aggressively ahead of a Group of 20 leaders' summit.

New claims for state jobless benefits fell last week while a closely watched gauge of demand for factory goods rebounded in May, offering assurance the economy's fragile recovery remains intact.

The dollar was lower against the euro ahead of a decision on interest rates from the U.S. Federal Reserve, while sterling rose sharply as investors continued to view the UK budget positively.

The euro held steady on Wednesday but remained vulnerable as a recent risk rally appeared to have run its course and on concerns about the euro zone banking system. A sharp fall in U.S. stocks .SPX the previous day and a subsequent drop in the Nikkei .N225 helped support the dollar and the yen, which are favoured when risk aversion spikes and doubts over the health of the global economy emerge.

The U.S. dollar and euro fell against the yen on Tuesday as investors turned risk-averse amid persistent doubts about China's move to make the yuan flexible and renewed worries about European banks' funding needs.

The dollar rallied for a second straight day against the euro on Tuesday as new concerns about the funding needs of European banks offset stronger-than-expected German economic data.

Weak May U.S. housing data undercut stocks and sent U.S. Treasuries up, while Europe grappled with a fresh tremor to its banking system after Fitch downgraded French bank BNP Paribas (BNPP.PA).

The dollar gained for the second straight day against the euro on Tuesday as new concerns about the funding needs of European banks offset stronger-than-expected German economic data.

Gold edged up in Europe on Tuesday as lower prices drew investors back to the market and expectations that gold's appeal as a refuge from risk will persist acted as a pillar of support for the metal.