euro zone

Moody’s has trimmed the rating for Greece by 2 notches to Ca Monday which is just one notch before the default status. The ratings agency warned that chance of a default is now “virtually 100 percent.”

Moody’s noted that while the bailout agreed last week by euro zone leaders will help Greece to reduce its debt, the country still faces medium-term solvency challenges and significant implementation risks.

German and French leaders have come to a consensus over the second bailout for Greece in a move to avert crisis for the whole Europe and the world.

After 7 hours of talks between German Chancellor Angela Merkel and French President Nicolas Sarkozy in Berlin. European Central Bank President Jean-Claude Trichet was present for part of their talks.

Now their decision will be presented to crisis summit in Brussels on Thursday starting at 1100 GMT of all 17 leaders of the bloc.

After 11 days of consecutive gains gold remained steady below its record high on Tuesday.

Experts believe gold appeal as a safe haven will remain as there is no short-term prospects for euro zone crisis solution while the White House was pursuing a fallback plan with Congress to raise the U.S. debt ceiling and avert a default that could plunge global financial markets into chaos.

Spot gold was little changed at $1,602.41 an ounce by 0325 GMT, off the record high of $1,607.01 reached on Monday.

U.S. gold GCcv1 was almost steady at $1,603.20.

The European Central Bank made a statement that it would further accept Greek debt as collateral for loans unless all the major credit rating agencies inclusively declare it to be in default.

The ECB said it would rely on the principle of using the best rating available from the agencies – Standard & Poor’s, Moody’s and Fitch – the official said.

Earlier S&P’s warned that a plan supported by Germany and France for banks to roll over their holdings of Greek debt into new bonds would constitute a “selective default”.

The growth forecast for the euro zone has been upgraded to 20% by the International Monetary Fund, up from the previous rate of 1.6%.

"There are some things that are going right," IMF acting Managing Director John Lipsky told CNBC. "Growth in the core economies is relatively solid and strong right now, but there is still in the medium term a very pressing need to improve both the stability and resilience and especially growth potential of the euro area economy."

Jean-Claude Trichet, the President of European Central Bank, said Friday that those nations who had not yet adopted far-reaching structural reforms faced weak growth after the financial crisis.

Addressing the audience at an annual ECB watchers conference, Trichet noted that the diversity featuring the euro zone reflects that of the United States and reiterated that new EU debt rules did not go far enough.

"Those countries that have yet to implement more far reaching structural reforms also have relatively low growth prospects after the crisis."

On Tuesday the US President Barack Obama talked to German Chancellor Angela Merkel and urged European countries to prevent a "disastrous" default by Greece. He promised that the United States would also provide its support as it fears the impact of euro crisis on its own economy.

Obama underlined the importance of German "leadership" on the issue. He clearly gave to understand that he expects Berlin to intervene.

Mexican central bank chief Agustin Carstens , the only declared rival to French Finance Minister Christine Lagarde in her bid for candidacy to lead the International Monetary Fund, said a non-European head of the Fund would mean tougher measures against euro zone crisis. Meantime, all we know that it won’t ever happen.

"It would be appropriate to have a non-European because a pair of fresh eyes could see European problems with greater objectivity," Carstens told El Pais in a visit to Spain as part of a tour to campaign for the job.

Jean-Claude Juncker, the head of euro zone finance ministers, said Thursday that the International Monetary Fund may refuse the next portion of aid to Greece due next month.

The report impacted the markets where European stocks declined and secure bond futures surged up.

Juncker's spokesman later clarified that if European and IMF inspectors were convinced by new Greek austerity measures, there would be no problem with the June aid tranche.

Bullion moved higher during Tuesday trades as equities dropped coupled with euro rise and stabilized flows of metal out of exchange-traded funds. Meantime, a rise in Chinese benchmark rates limited gains.

The gold price came under intense pressure last week after more signs emerged that global growth continues to improve and that the euro zone debt crisis has not worsened, which eroded some investor appetite for the metal.

European leaders are discussing the possibility to overhaul the euro zone’s 440 billion-euro ($599.1 billion) rescue fund in exchange for some stricter measures and closer surveillance on struggling states, according to a report from the Financial Times.

Citing people familiar with the talks the FT reported that senior leaders are considering "enhanced surveillance" of Spain and Portugal rather than assistance, which would give a European Union stamp of approval on proposed reforms.

Common measures should be worked out by European governments to address the stability of the euro zone, urges EU Economic and Monetary Affairs Commissioner Olli Rehn, as cited by the German newspaper Die Welt.

"We must agree on common measures as soon as possible - the sooner the better," he told Die Welt. "The calming on markets in the last few weeks has given us a bit of breathing space, but there is no reason to lean back now, we must now act with the necessary determination."

All 16 euro zone countries along with any other European Union members should coordinate their economic policies more closely in the futures, France Economy Minister Christine Lagarde told a German newspaper.

"The crisis showed us that it is not sufficient to limit public debt as foreseen in the Maastricht Treaty. Ireland stuck to these criteria and finds itself nevertheless in difficulty," Lagarde said in an interview with the Sueddeutsche Zeitung.

Two top European banks, HSBC and BNP Paribas, excel their earnings outlooks as bad debts fell sharply to make up for slowing investment banking growth.

According to the BofA Merrill Lynch Survey of Fund Managers for July, investors’ forecast over the global economy and corporate earnings turned bearish.