The Australian dollar leapt to a six-month high but stocks turned negative after the central bank held rates steady at a review when markets had positioned for a rate cut.

Opinions were divided over whether the wrangling over Greece’s debt restructuring talks would eventually be resolved or trigger contagion across other vulnerable euro zone countries, tempering risk-taking investments.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose as much as 0.4 percent to its highest since September 1, then reversed direction, and last stood barely changed.

Australian shares were among the big losers, ending down 0.5 percent — having been up before the central bank’s afternoon decision to hold rates steady.

Financial spreadbetters expected Britain’s FTSE 100, Germany’s DAX and France’s CAC-40 to open flat.

Japan’s Nikkei average ended down 0.1 percent, slipping from a three-month high just shy of 9,000 hit on Monday.

“Concerns over the Greece issue are limiting real risk taking from investors, even if the environment generally appears to be improving,” said Tetsu Emori, a fund manager with Astramax Co. in Tokyo.

“I’d expect all concerned parties to eventually strike a deal because it is in nobody’s interest if Greece defaults. But a further delay in the debt talks will really hamper sentiment,” he said.

After resisting terms of a proposed new bailout deal which demands strict labour reforms and other austerity steps, Greek political leaders face crunch talks on Tuesday to clinch an agreement needed to avoid a debt default.

The full package must be approved by the euro zone, the European Central Bank and the International Monetary Fund before February 15 in order to complete legal procedures for a bond swap deal for a March 20 bond redemption.

Moreover, some euro zone countries require parliamentary approval to raise the bailout money.

RATE DIFFERENCES

The euro eased 0.2 percent to $1.3107, although it had recovered from an overnight low of $1.3026.

The single currency hit a new record low against the Australian dollar near A$1.2140, as wide interest rate differentials made the Aussie more attractive than the struggling euro.

The Australian dollar jumped more than one cent to a six-month high of $1.0812 after the Reserve Bank of Australia unexpectedly kept interest rates steady at 4.25 percent, although it kept the door open to an easing if conditions deteriorated.

“In the absence of a messy Greek default, there is nothing really at the moment that’s going to stop the Aussie from going and testing all-time highs,” said David Scutt, a trader at Arab Bank Australia. It hit a 30-year peak of $1.1081 in July.

The dollar was up 0.3 percent against the yen at 76.72. Data from Japan’s Finance Ministry on Tuesday confirmed that Tokyo conducted stealth foreign exchange intervention in October-December, even after a massive intervention on October 31 when the yen hit a record high around 75.31.

Commodities retreated with the dollar’s gain against a basket of major currencies.

U.S. crude futures eased after rising above $97 a barrel, while Brent slipped after trading above $116 a barrel.

Spot gold was up 0.1 percent to $1,722 an ounce, trimming gains made earlier on an initial modest rise in equities.

Asian credit markets remained subdued, with the spreads on the iTraxx Asia ex-Japan investment grade index little changed, after tightening sharply on Monday.

The ECB’s generous funding in December and expectations ahead of another such liquidity operation scheduled on February 29 sent three-month Euribor rates, a main gauge of unsecured interbank euro lending, to 1.094 percent on Monday, the lowest level in nearly a year.

Analysts expect consolidation in several equity markets which have recently climbed to near resistance levels, which may then pave the way for a break higher.

India’s main 30-share BSE index is expected to find

major resistance at an October peak of 17,908, after rising as high as 17,829 on Monday.

Shanghai shares fell below a key support of 2,300 on Tuesday. A fall below 2,240-50 will reset the downtrend, while a break above 2,360 points to an eventual move higher.

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William arrived in the archipelago on Thursday ahead of a tour of duty as an RAF search and rescue pilot.

The Ministry of Defence (MoD) said the posting was part of a “routine operational deployment”, despite Argentina likening it to that of a “conqueror”.

Tensions have risen between the two countries in the past week following the announcement that one of the Royal Navy’s most advanced new warships is being sent to the area.

HMS Dauntless, a Type 45 destroyer, is due to set sail for the South Atlantic on her maiden mission in the coming months to replace frigate HMS Montrose.

William will attend a series of briefings and take part in a “familiarisation flight” before he begins his search and rescue work in the remote outcrop, known in Argentina as Las Malvinas.

An MoD spokesman said: “MOD can confirm Flight Lieutenant Wales, as part of a four-man Search and Rescue (SAR) crew, has arrived in the Falkland Islands on a routine operational deployment and will shortly take up SAR duties post a period of briefings and a familiarisation flight.”

The Argentinean government has claimed William’s deployment was a distraction from Britain’s “internal problems”. Vice president Amado Boudou told the country’s La Red radio station that the move was a case of “bravado” to mask high unemployment and the prospect of Scottish independence.

Meanwhile, angry scenes broke out in Buenos Aires, where a group of masked protesters reportedly took to the streets and threw paint at a British bank.

The Royal Navy has rejected suggestions the decision to send HMS Dauntless to the area was a riposte to increased tensions over the sovereignty of the Falklands. William’s posting has been similarly defended by the MoD as part of a “normal” squadron rotation, but it has been branded a “provocative act” by Argentina.

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“If it (Argentina) is genuinely interested in progress it should stop these attempts to intimidate a civilian population,” Hague said in comments carried by The Times on Saturday.

Buenos Aires “should agree to discuss how, as democracies, the Falklands, Britain and Argentina can work together in the South Atlantic neighbourhood in our common interest,” he added.

The strong words were the latest exchange in a long dispute over the Falklands, internally self-governing islands located 400 nautical miles from Argentina.

They have been held by Britain since 1833 but are still claimed by Argentina, where they are known as the Malvinas, despite its defeat in the 74-day war fought between the two countries in 1982.

Tensions began rising in 2010, when London authorised oil prospecting around the islands, and have spiralled in recent weeks as Argentina’s neighbours joined the dispute.

In December, South American trading bloc Mercosur agreed to close its ports to ships flying the Falklands flag.

Hague in his comments in the Times reiterated the right of the 3,000 Falkland islanders to self-determination.

“The future of the Falkland Islands is about people: their freedom to determine their own future and to develop their own community and economy. Thirty years after the Argentine invasion, their right to self-determination remains, and will always remain, the cornerstone of our policy,” he stressed.

Many living on the islands are the ninth-generation there and say they are “Falkland Islanders first and British second,” he added.

Hague went on to say that there were areas where London and Buenos Aires could cooperate over the Falklands, such as fish-stocks management, hydrocarbon exploration and strengthening air and sea links between the Falklands and South America.

While stating that “we are happy to talk,” about the Falklands issue he deplored the “less constructive approach” of successive Argentine governments.

The British foreign minister, who ended a trip to Brazil on Thursday, acknowledged the Mercosur statement banning vessels that fly the Falkland Islands flag.

However he said he saw “no regional appetite for joining Argentina in its attempts to damage the islands’ economy or target the livelihoods of islanders.”

Protesters marched on the British embassy in Buenos Aires on Friday, burning the Union Jack, and demanding Argentina snap diplomatic ties with London.

British Prime Minister David Cameron sparked fury there after he called Argentina’s attitude towards the South Atlantic islands “colonialist.”

The 74-day war for control of the Falklands started on April 2, 1982 and killed 649 Argentines and 255 British. It also forced Argentina to withdraw from the islands in the south Atlantic Ocean.

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The United States and Canada said on Wednesday Europe must put up more of its own money to resolve its sovereign debt crisis, raising doubts G20 talks in Mexico this week can lay the ground for a deal on bolstering IMF resources.

Japan and South Korea also want Europe to do more and China might insist a number of conditions are met before it supports a boost in IMF resources.

“We continue to believe that the IMF can play an important role in Europe, but only as a supplement to Europe’s own efforts,” a U.S. Treasury spokesperson said. “The IMF cannot substitute for a robust euro area firewall.”

Group of 20 deputy officials meet in Mexico City on Thursday and Friday to discuss boosting IMF resources. Any outcome would need leaders’ signoff. G20 finance ministers meet in late February.

The IMF plan to boost its lending capacity eased worries on financial markets about Europe’s funding difficulties, boosting the value of the euro.

IMF sources said the world faces a $1 trillion financing gap over the next two years if global economic conditions worsened considerably. The IMF’s current lending capacity is about $380 billion.

The sources, present at an IMF board meeting on the issue on Tuesday, said the Fund was seeking to raise up to $600 billion to meet those potential financing needs. Of that, $500 billion would be for lending and $100 billion would be a “protection buffer.”

An IMF spokesman confirmed the Fund was seeking to raise up to $500 billion in additional lending resources. He said that amount included a European commitment to inject $200 billion into IMF resources.

“At this preliminary stage, we are exploring options on funding and will have no further comment until the necessary consultations,” he said.

The United States repeated that it would not contribute more resources to the IMF.

With a strained budget at home, some U.S. congressional Republicans have threatened to yank $100 billion in U.S. money to the IMF if the funds are used to bail out euro zone countries. The White House is unlikely to want to take the issue on as President Barack Obama seeks re-election this year.

“We have told our international partners that we have no intention to seek additional resources for the IMF,” a Treasury spokeswoman said.

“Many countries want the Europeans to move ahead with tougher and clearer measures, which at this moment translates to more resources to its stability fund,” said a senior Brazilian government source attending the G20 officials’ meeting in Mexico.

China’s Foreign Ministry said Beijing stood by G20 commitments to ensure the IMF has ample funds to cope with the financial crisis, but it stopped short of saying the country was ready to put up more cash.

Indeed, China is likely to resist moves to increase IMF resources unless a number of conditions are met, said Xiang Songzuo, vice director of the International Monetary Institute in Beijing, a high-level policy think tank.

He said these would include more voting power for China and other emerging nations, changing the stance of IMF policy more to meet the concerns of emerging countries — such as on stabilizing capital flows and exchange rates — and making the mechanism for crisis rescue much more transparent.

“The process of negotiating all of that would be quite time consuming,” Xiang said.

Bank of Canada Governor Mark Carney said it was not clear European governments had done everything necessary to make sure they could fund themselves at sustainable interest rates over the next few years.

“If it makes sense to enhance the resources of the IMF, the principal focus, it would seem, should be on dealing with fallout of the European crisis for innocent bystanders,” he told a news briefing in Ottawa.

Japan stands ready to support the IMF fund raising drive but it wants to see strong efforts by European countries to resolve the crisis first, a senior government source said in Tokyo.

South Korea is also pressing for discussions first about Europe’s contribution and for it to agree on additional measures, another source connected to the process said. European nations have argued that they have done enough and were calling for more IMF resources now.

“If, with the parallel discussion, we can achieve extra measures from the Europeans and afterwards agree on promises of additional resources for the IMF from non-European countries in the G20, I think it would be a good result,” the source said.

IMF Managing Director Christine Lagarde said the IMF management would explore options for increasing the fund’s firepower.

Europe’s debt crisis is widely seen as the biggest threat to the global economy. Many countries used up a lot of their financial firepower fighting the global downturn in 2008 and 2009. A fresh global slump would raise fears more countries might need to be rescued by the IMF.

Indeed, the World Bank on Wednesday said Europe was probably already in recession and the euro area debt crisis posed a “real” risk to the global economy. The IMF has warned it will cut its global growth projections when it updates its forecast on January 24.

With credit downgrades in nine euro zone countries by Standard & Poor’s last week, including France, and uncertainty over Greek debt talks that risk pushing the country into default, the IMF board has urged euro zone leaders to take steps to contain the crisis.

The board called for policies that would address the European crisis and for euro zone policymakers to make sure there is enough money available to tackle the bloc’s debt problems effectively.

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The English version of the online encyclopedia receives an average of more than 25 million daily visitors globally, according to comScore research data.

It is the highest profile name to join a growing campaign to black out pages so visitors only see information criticising the controversial Stop Online Piracy Act (Sopa) and the Protect Intellectual Property Act (Pipa).

“When you are trying to do your research paper, when you are just trying to find some factual information and a lot of people rely on Wikipedia, it won’t be there,” Lance Ulanoff, editor-in-chief of online news site Mashable, said.

“They’ve basically come to a message that says they’ve gone dark in protest.”

Smaller site Boing Boing blacked out its pages and the creators of Reddit.com promised to keep its homepage down for 12 hours. The AOL-owned Huffington Post joined in with a black entrance screen.

Search engine Google (NasdaqGS: GOOG - news) has not blacked out its pages but created a link for their US homepage redirecting users to information about why Sopa may not be a good thing.

Google has repeatedly said the bill goes too far and could hurt investment.

Along with other internet companies such as Yahoo (NasdaqGS: YHOO - news) , Facebook, Twitter and eBay, it has run advertisements in major US newspapers urging Washington politicians to rethink their approach.

The Sopa legislation under consideration in the House of Representatives and Pipa in the Senate aims to crack down on online sales of pirated US movies, music and other goods.

It forces internet companies to block access to foreign sites offering material that violates US copyright laws.

Advertising networks could also be required to stop online ads, while search engines would be barred from directly linking to websites found to be distributing pirated goods.

The move comes after the US Immigration and Customs targeted dozens of firms based in China selling pirated football, basketball and ice hockey jerseys to people living in the US.

The action, known as Black Monday, occurred in late November (Stuttgart: A0Z24E - news) and affected up to 150 websites selling sportswear, as well as fake luxury handbags.

Rather than specifically targeting the sellers in China it forced US hosting companies to shut down offending websites.

However, within weeks some sites were reactivated and selling items at a fraction of the genuine retail price.

One firm, based south of Shanghai in the Chinese city of Putian, still brazenly advertises its wares.

The Chinese site states: “Our company are prodessional in sports jerseys, we have our manufacturer. We supply Top quality produce and Excellent Services, For now our company have lots of customers from Europe (Chicago Options: ^REURUSD - news) , American, Canada, England, Austialia etc. We hope to build long-term business with all our customers.”

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The bank cut its growth forecast for developing countries this year to 5.4 percent from 6.2 percent and for developed countries to 1.4 percent from 2.7 percent. For the 17 countries that use the euro currency, it forecast a contraction, cutting their growth outlook to -0.3 percent from 1.8 percent.

Global growth could be hurt by a recession in Europe and a slowdown in India, Brazil and other developing countries, the Washington-based bank said. It said conditions might worsen if more European countries are unable to raise money in financial markets.

“The global economy is entering into a new phase of uncertainty and danger,” said the bank’s chief economist, Justin Yifu Lin. “The risks of a global freezing up of capital markets as well as a global crisis similar to what happened in September 2008 are real.”

Developing countries that have enjoyed relatively strong growth while the United States and Europe struggled might be hit hard, Lin said. He said they should line up financing in advance to cover budget deficits, review the health of their banks and emphasize spending on social safety nets.

Many governments are in a weaker position than they were to respond to the 2008 global crisis because their debts and budget deficits are bigger, Lin said at a news conference.

In the event of a major crisis, “no country will be spared,” Lin said. “The downturn is likely to be longer and deeper than the last one.”

The bank’s outlook in its “Global Economic Prospects” report issued twice a year adds to mounting gloom amid Europe’s debt crisis and high U.S. unemployment.

“It is very likely that most European countries, including Germany, entered recession in the fourth quarter of last year,” said Hans Timmer, the World Bank’s director of development projects.

Investors have cut investments in developing countries by 45 percent in the second half of last year, compared with the same period in 2010, Timmer said.

The report follows similar warnings about the global economy by its sister organization, the International Monetary Fund, and private sector forecasters.

For the United States, the bank cut this year’s growth forecast to 2.2 percent from 2.9 percent and for 2013 to 2.4 percent from 2.7 percent. As reasons, it cited the anticipated global slowdown and the on-going fight in Washington over spending and taxes.

Global growth might suffer from the interaction of Europe’s troubles and efforts by China, India, South Africa, Russia and Turkey to cool rapid growth and inflation with interest rate hikes and other measures, the bank said.

China’s expansion slowed to a 2 1/2-year low of 8.9 percent in the three months ending in December from the previous quarter’s 9.1 percent.

As Europe weakens, developing countries could find “their slowdown might be larger than is necessary to cope with inflation pressures,” Lin said.

A global downturn would hurt developing countries by driving down prices for metals, farm goods and other commodities and demand for other exoprts, the World Bank said.

Slower growth is already visible in weakening trade and commodity prices, the World Bank said.

Global exports of goods and services expanded an estimated 6.6 percent in 2011, barely half the previous year’s 12.4 percent rate, the bank said. It said the growth rate is expected to fall to 4.7 percent this year.

Prices of energy, metals and farm products are down 10 to 25 percent from their peaks in early 2011, Timmer said.

The United States is already feeling some pain from Europe’s crisis. Exports to Europe fell 6 percent in November, the Commerce Department said last week.

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Joran van der Sloot met Ms Flores in a casino in the Peruvian capital Lima. The couple returned to his hotel room where she was found dead two days later. She had been strangled. Van der Sloot fled the country but was captured in Chile by police. He was then handed over to the Peruvian authorities at the border, where he was made to cross the border himself thus avoiding lengthy extradition procedures.

Van der Sloot made a full confession to police not long after his arrest. Although he said he killed her because she saw information on his laptop pertaining to the case of missing teen Natalee Holloway.

Joran van der Sloot has been notorious since the Ms Holloway disappeared on the Dutch Antilles island Aruba in 2005. Ms Holloway was last seen with Van der Sloot. Her body was never found, but she was declared dead by a US judge only yesterday. Although he is still the prime suspect in the case, Van der Sloot has never been charged due to lack of evidence. This is in spite of a televised confession recorded by secret cameras in a conversation set up by crime journalist Peter R. de Vries.

His trial began just one week ago. The public prosecution demanded 30 years in prison and 200,000 Peruvian sol in compensation. He has been ordered by the court to pay almost 60,000 euros in compensation to the Flores family. The trial ended early after Van der Sloot pleaded guilty to all charges.

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Kirchner had the surgery on Wednesday to remove her thyroid gland in the city of Pilar, 50 kilometers (30 miles) north of Buenos Aires.

“The operation was performed on the president without any problem or complication,” spokesman Alfredo Scoccimarro said in front of Hospital Austral, where hundreds of supporters had gathered to show their support.

Kirchner awoke after the surgery and showed signs of “a good immediate post-operative recovery,” according to a statement from her surgeon, Pedro Saco.

Kirchner’s cancer was discovered during a routine medical exam on December 22, only 12 days after she was sworn in for a second term as Argentina’s president. She won reelection in October in a landslide.

She is scheduled to be hospitalized for 72 hours with a 20-day recovery period, during which Vice President Amado Boudou is taking over Kirchner’s executive branch responsibilities.

The president, 58, arrived at the hospital Wednesday morning with her children Maximo and Florencia on board a helicopter.

Kirchner, the country’s first elected female president, was diagnosed with cancer “on the right lobe of the thyroid gland,” Scoccimarro said last week.

Doctors predicted she would be able to resume all of her duties as president.

“The prospects are excellent and one would not expect any further growth of the tumor after the operation,” said Mario Bruno, an oncologist and a member of the Argentina Association of Cancer.

Supporters camped out at the hospital since Tuesday put up posters that said, “Be Strong Cristina,” along with flags and banners showing the faces of Kirchner and her deceased husband, Nestor, who preceded her as president.

Dozens of television camera crews, reporters and photographers had waited outside the hospital since Tuesday night in sometimes oppressive heat.

Security was spread over a wide area by members of the military police, Buenos Aires federal police and presidential security force.

Kirchner is one of several Latin American leaders to suffer from cancer since 2009.

Venezuelan President Hugo Chavez, Brazilian President Dilma Rousseff and Paraguayan President Fernando Lugo have all waged battles against the disease and say they are now cancer-free.

Former Brazilian president Luiz Inacio Lula da Silva was diagnosed with throat cancer in late October and has undergone chemotherapy treatments. He re-entered a hospital this week for radiation therapy.

In a message of support to Kirchner made public by the Citizenship Institute he founded after leaving office, Lula expressed his “great joy” at the news that her surgery had gone well.

“We will soon meet again, both in good health,” he said.

Chavez last week speculated that the United States could have developed a “technology to induce cancer” in Latin American leaders, without offering any evidence that such technology existed.

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At 12pm AEDT today, the local currency was at 100.55 US cents, down from 101.50 yesterday afternoon.

IG Markets institutional trader Chris Weston said the Australian dollar was shaped by a drop in other currencies due to growing eurozone uncertainty.

“Price action on the Aussie dollar is just mirroring what we’re seeing with the euro, which is trading on fears around what is happening with the ECB’s (European Central Bank’s) balance sheet,” he said.

“The fact that that’s gone out with a record level is a sobering reminder of the bleak outlook for EU growth, and the Aussie dollar as a proxy for global growth went along for the ride.

“The risks in the short to medium term are still skewed to the downside for the Aussie dollar.”

The ECB announced that its balance sheet had reached a record 2.73 trillion euros, due to its decision to lend more money to institutions.

Mr Weston said he did not expect much more buying ahead of a crucial Italian bond action on Thursday, which would be keenly watched.

It’s not one of those events that I see people buying in anticipation of, because to me it holds downside risks,” he said.

“We’re interested on the skew in the three and ten years – funds will be allocating a percentage to each, and depending on that skew, it will determine the risk profile of the market.

“If we see it heavily weighted towards the shorter dated paper, we are likely to see the euro and the Aussie dollar come off.”

The success of the auction could be a reflection of Italy’s potential to raise cash in the market next year, Mr Weston said.

“Italy has to raise a lot of money next year in the primary market, over three hundred billion, so if they can’t get auctions away now, they’re really going to struggle,” he said.

Since 7am AEDT the local unit has traded between 100.44 and 101.01 US cents.

Bond future prices were higher at noon.

The March 10-year bond futures contract was trading at 96.225 (implying a yield of 3.775 per cent), down from 96.180 (3.820 per cent) yesterday.

The three-year bond futures contract was at 96.880 (3.120 per cent), up from 96.850 (3.150 per cent) yesterday.

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“I am going to continue working with the greatest commitment,” she said as she met the country’s governors at her presidential palace today, one day after her spokesman announced that she would have surgery next week.

She said Venezuelan President Hugo Chavez, who has himself waged a successful battle against cancer, was the first regional leader to call her to offer his support.

The presidents of Brazil, Paraguay and Chile also called Kirchner, who earlier this month was sworn in for her second term after a resounding election victory.

Brazil’s President Dilma Rousseff, who has recovered from lymphatic cancer, wished Kirchner good luck for her upcoming surgery.

The Brazilian leader told the 58-year-old Kirchner she was sure she would have the necessary strength to face this difficult moment, her office in Brasilia said.

The 64-year-old Rousseff, who will mark her first year in office Sunday, announced last year that she had fully recovered from lymphatic cancer for which she was treated in 2009. She undergoes routine checkups every six months.

Paraguay’s cancer-stricken President Fernando Lugo said Kirchner told him that she was “very well”.

Lugo, 60, was diagnosed with non-Hodgkin’s lymphoma last year and has undergone treatment in Brazil.

Chilean President Sebastian Pinera reported after his own telephone conversation with Kirchner that she said the cancer was “moderate”, according to a source in his office.

Kirchner, Argentina’s first elected female president, was found to have thyroid cancer during a routine medical examination on December 22, two months after being re-elected in a landslide vote, according to her spokesman.

Former Brazilian president Luiz Inacio Lula da Silva was diagnosed with throat cancer in late October and underwent chemotherapy treatment.

Doctors said Lula will undergo weeks of radiation therapy early next year to “completely eliminate the cancer”

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