Hopes for a boost to the eurozone bailout fund saw global markets arrest their slide overnight, although there was no relief rally.
In a much needed boost to sentiment, an ECB policy-maker flagged the possibility of the European Stability Mechanism (ESM) being granted a banking license, which would give it the ability to borrow money from the ECB.
A banking license, while yet to receive full backing from EU officials, would sooth concerns that the ESM does not have enough firepower to bail out Spain or Italy.
In Europe, the German DAX and French CAC both managed gains of 0.2%, whilst the FTSE slipped one point to 5498 after data revealed the UK economy contracted a sharp 0.7% in the 2Q12.
US stocks began the trading session on a positive note, but faded badly towards the close as Apple sank 4% after reporting a weaker-than-expected third quarter profit.
The Dow gave up a lead of more than 110 points to finish the session 60 points (+0.5%) stronger, at 12676. The S&P500 closed flat, and the slump in Apple shares saw the Nasdaq weaken 0.3%.
There were gains in commodity markets, with gold soaring on speculation there will be some stimulus announcement at next week’s Fed meeting. Bullion rose 1.7% to $1606 an ounce.
Oil shrugged off a surprise rise in weekly US crude stockpiles, instead adding 0.6% to $88.79 a barrel, as equities rose and the US dollar weakened.
The greenback slipped from a two-year high against the euro, with the shared currency strengthening on prospects of a banking licence being granted to the ESM.
The pound fell slightly against the US dollar, as traders bet the weak UK GDP result will spur Bank of England policy-makers to increase monetary stimulus.
The Aussie jumped 0.9% to $US1.0314, this despite yesterday’s domestic CPI reading raising the odds of another RBA rate cut. Our dollar was instead supported by the ECB banking license comments.
In company news, Wesfarmers has announced a 4.6% on-year rise in Coles 4Q12 sales. The result was achieved despite ongoing price deflation and discounting.
There is no major local economic data due out today.