EUROPEAN CENTRAL BANK

With Silvio Berlusconi's fate resting on a group of party rebels threatening to pull the rug from under his government next week, the Italian prime minister is using carrot and stick to try to win over the doubters and pull off yet another parliamentary escape.

After another week of confusion and turmoil in Europe, investors are ditching whatever hopes they once had for a conclusive solution to the debt crisis.

Greek Prime Minister George Papandreou sealed a deal with the opposition Sunday night on a crisis coalition to approve an international bailout, but details remain thin despite an EU ultimatum for Athens to get serious about tackling its huge problems.

Greek Prime Minister George Papandreou sealed a deal with the opposition on a crisis coalition to approve an international bailout, but details remain thin despite an EU ultimatum for Athens to get serious about tackling its huge problems.

After another week of confusion and turmoil in Europe, investors are ditching whatever hopes they once had for a conclusive solution to the debt crisis.

Countries in the Eurozone will find it increasingly unattractive to stay in the single currency, if there is a German-led fiscal integration, the chairman of Goldman Sachs Asset Management said in a Sunday Telegraph interview.

Europe has a new informal leadership directorate intent on finding a solution to the euro zone's debt crisis, but it has yet to prove its ability to come up with a lasting formula.

The European Central Bank frequently discusses the possibility ending the purchase of Italian government bonds in case it concludes Italy is not adopting promised reforms, said Yves Mersch, an ECB governing council member.

The European Central Bank's interest rate cut on Thursday was a pre-emptive strike, policymaker Juergen Stark said on Friday, and urged the bank to call an early halt to its sovereign bond-buying programme.

European Central Bank policymaker Juergen Stark urged the bank on Friday to call an early halt to its bond-buying program, stressing it sees the plan as temporary even as it faces pressure to scale purchases up to tackle the euro zone crisis.

Private sector activity in the euro zone shrank at its fastest pace in 28 months in October as the debt crisis sapped new business and soured sentiment in an economy looking like it is heading into a slump, survey data showed on Friday.

Asian shares rallied more than 3 percent and the euro steadied Friday on hopes that Greece will abandon a proposed referendum on a European Union bailout, but investors remained cautious over a confidence vote scheduled for later in the Greek parliament.

South Africa's rand firmed against the dollar on Thursday as Greek government plans for a referendum on a sovereign bailout appeared to unravel with the expected collapse of the government.

South African stocks ended a see-saw session flat on Thursday as an upbeat mood in Europe was offset by a sharply stronger currency at home.

The European Central Bank cut interest rates by a quarter point to 1.25 percent in a surprise move on Thursday and President Mario Draghi said the euro zone could subside into a mild recession in the latter part of 2011.

Gold prices surged two percent Thursday after a surprise interest rate cut by the European Central Bank and Greece's prime minister abruptly dropping a widely denounced plan for a referendum on accepting bailout money.

Gold rose 1 percent on Thursday, boosted by a surprise interest rate cut by the European Central Bank and safe-haven buying amid an uncertain future for the European Union as Greece's government was on the brink of collapse.

Earlier reports indicated that Papandreou would step down and help form a coalition government.

Howard Archer, chief European and U.K. economist said, The move also suggests that Mario Draghi will not be afraid to make bold decisions.

The European Central Bank cut interest rates by a quarter point to 1.25 percent in a surprise move Thursday, acting boldly to support the ailing euro zone economy at President Mario Draghi's first policy meeting in charge.

Berlusconi has thus far refused to step down, citing that it would be impractical to call new elections in the middle of such a grave economic crisis.