By Chris Reese

  NEW YORK, Dec 2 (Reuters) - Most Wall Street economists expect the Federal Reserve will undertake another major economic stimulus program, probably early next year, due to tepid U.S. growth and fallout from Europe's debt crisis, according to a Reuters poll on Friday.

  Thirteen of 20 economists at primary dealers, the large financial institutions that do business directly with the U.S. central bank, said they expect the Fed to undertake a new program of buying mortgage-backed securities (MBS).

  Two more dealers said another program of MBS buying was possible.

  Six of the 13 dealers who expected further MBS purchases said the Fed would also embark on a new program of buying Treasury debt to boost the economy.

  The median of forecasts from 11 dealers who provided estimates of the size of a new asset-buying program was for the purchase of $550 billion of securities.

  That would be near the size of the Fed's second round of quantitative easing, known as QE2, under which it bought $600 billion of Treasuries. Under QE1 and QE2 the Fed's purchases of MBS and Treasury debt totaled $2.3 trillion.

  Seventeen of 20 dealers in the Reuters poll said the Fed would ease monetary policy by changing the way it communicates with financial markets.

  In August, the Fed embarked on this route when it first said high unemployment and low inflation meant interest rates were likely to be held at " exceptionally low levels" until " at least through mid-2013."

  Previously, the Fed had not set specific targets as to how long it might keep interest rates at certain levels.

  Wall Street does not expect the Fed to wait long before it takes further action.

  Ten of the primary dealers predicted the Fed will ease monetary policy, either through Treasury and MBS purchases or a change in communications policy, in the first quarter of 2012.

  The poll was conducted on Friday after the government announced the U.S. unemployment rate fell to a 2-1/2-year low in November, although the pace of hiring remained sluggish. For details see [ID:nOAT004918].

  The dip in the jobless rate boosted some hopes of at least a modest recovery in the jobs market but economists at primary dealers nearly all said the potential for more U.S. stimulus, and the risk of the United States falling back into recession, rests largely on how the euro zone debt crisis plays out.

  " So much remains dependent on the goings-on across the pond and the acceleration there, or the deceleration, of the crisis," said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.

  " It doesn't make a lot of sense (for the Fed) to do anything now toward the year end when we have already been suffering from a ton of volatility and liquidity issues in the market," he said.

  The Fed's current stimulus plan, dubbed " Operation Twist," is a $400 billion program that extends the maturity of the central bank's Treasuries holdings in a bid to lower mortgage rates and other long-term borrowing costs. The program is scheduled to last through the end of June 2012.

  " They could modify the Twist program to twist into mortgages rather than Treasuries in the first part of next year, but that is not a certain event though it would be the most likely development," said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities in New York.

  " If the economy is shifting into a faster pace of growth they will not do it, but if we do weaken in response to developments in Europe then that would be the route they would pursue," he said.

  While events in Europe remained a fear, economists did not seem to be increasing the chances the United States would fall back into recession. The median of forecasts from 19 dealers ascribed a 25 percent chance of another U.S. recession in the next year, which was unchanged from a similar poll conducted Nov. 4.

  There are 21 U.S. primary dealers. Morgan Stanley & Co did not respond to the Reuters poll.

NEW YORK -

  * Euro vulnerable before ECB and EU meetings

  * ECB's Stark says crisis cure needed to avoid disaster

  * British PM threatens to obstruct a Franco-German drive

  * Speculators raise bets in favor of dollar

 

  (Updates prices, adds quotes)

  By Julie Haviv

  NEW YORK, Dec 2 (Reuters) - The euro faced make-or-break time ahead of a European Central Bank meeting and a European Union summit next week, as the single currency fell against the dollar on Friday for the first time in five sessions.

  Investors were wary of placing aggressive bets in favor of the 12-year-old currency ahead of the ECB meeting next Thursday and the EU summit the following day.

  French and German leaders are to meet on Monday to outline joint proposals to be discussed at the EU meeting.

  " People have been playing up the fact that the euro zone is running out of time because their steps have been incremental and not big enough to calm fears," said Mark McCormick, currency strategist at Brown Brothers Harriman in New York. " They are making progress, but everyone is looking for a game-changer."

  The euro rose early on reports the ECB may lend to weak euro zone countries through the International Monetary Fund in hopes of easing the debt crisis. The euro zone's common currency was also buoyed on rising risk appetite after the U.S. Labor Department reported the unemployment rate fell to a 2-1/2-year low in November, but it reversed course on various market rumors, which included a downgrade of Spain's debt.

  Investors were also hesitant to buy the euro in the aftermath of a strong rally this week.

  The ECB is expected to cut interest rates again next week, a negative for the euro because it would make higher-yielding currencies more attractive.

  The ECB hinted Thursday it was ready to move more aggressively to tackle the debt crisis if regional politicians agree on much tighter budget controls, though it stopped short of detailing what exact measures it would take.

  " Risks for the euro are still to the downside," McCormick said. " A move toward fiscal integration by circumventing the EU treaty and not rewriting it could be a potential positive for the euro in the short-term, but the economic landscape is much more negative for the euro and we expect it to end the year at $1.29."

  In contrast, the drop in the U.S. unemployment rate tempered expectations that Federal Reserve officials will ease monetary policy further, a positive for the dollar.

  The euro fell as low as $1.33630, blowing through stops at $1.34150. It was last at $1.3398 on trading platform EBS, down 0.5 percent on the day. It rose to a 10-day high of $1.35505 immediately after the U.S. non-farm payrolls report.

  Juergen Stark, one of the European Central Bank's top policymakers, warned on Friday that leaders must urgently find a solution to the euro zone debt crisis or there will be widespread macroeconomic and financial disaster.

  British Prime Minister David Cameron threatened to obstruct a Franco-German drive for swift change to the European Union's treaty, a sign of the difficulty leaders will face in transforming Europe to save the euro.

  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

  Other stories on euro zone crisis

  Ten days of secret planning

  Euro zone in graphics http://r.reuters.com/hyb65p

  Market disconnect graphic http://r.reuters.com/van64s< /A1 >

  Interactive timeline http://link.reuters.com/rev89r< /A1 >

  INSTANT VIEW- US jobless rate drops

  Graphic - U.S. payrolls: http://link.reuters.com/suf45s

  Graphic - U.S. jobless rate, payroll change. http://r.reuters.com/was53s

  Graphic - U.S. nonfarm payrolls by type. http://r.reuters.com/kus53s

  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

  Uncertainty about the upcoming key euro zone events is likely to remain elevated, according to Greg Anderson, G10 strategist at CitiFX, a division of Citigroup, in New York.

  " Past experience has also taught investors not to get overly excited about the outcome of yet another EU summit," he said.

  The euro could continue to consolidate only gradually against the background of growing market expectations of a coordinated and comprehensive approach to deal with the euro zone debt crisis, he said.

  Currency speculators raised their bets in favor of the U.S. dollar in the latest week to the highest level since June 2010, according to data from the Commodity Futures Trading Commission released on Friday.

  The dollar rose 0.4 percent against a currency basket , to 78.646. Against the yen, the dollar rose 0.3 percent to 77.94 yen.

  (Additional reporting by Gertrude Chavez-Dreyfuss Editing by Leslie Adler)

DUBLIN, Nov 29 (Reuters) - Over one-quarter of Ireland's almost 5.5 billion euros in planned expenditure savings for the period 2013-15 will arise from policy steps to be announced in next week's budget for 2012, government documents showed on Tuesday.

  Ireland will outline on Monday the breakdown of 1.45 billion euros of expenditure savings planned for next year, detailing how much it will save through cutting public sector workers by 7,000, reforming its social welfare system and reducing costs in other departments.

  The continued savings on the public sector wage bill and from entitlement reforms in social welfare will be " substantial" and account for the over one-quarter of savings to 2015, according to the updated memorandum of understanding between Ireland and its creditors, published on Tuesday.

  A draft version of the memorandum, first obtained by Reuters, was leaked by German lawmakers earlier this month and caused a political storm as it detailed budgetary plans -- including an increase in sales tax -- not yet announced by the government.

  The draft did not detail the carryover effects of planned expenditure savings but it did note that Ireland hoped to raise 670 million euros from next year's two percentage point sales tax hike, a figure not included in the signed version.

  The updated memorandum also said that the additional cut in public sector numbers of 11,500 -- confirmed by government this month -- together with efficiency and equity-enhancing social welfare system adjustments, as well as contributions from other non-pay programmes will deliver the remaining new 2013-15 savings.

  Under the terms of its EU/IMF bailout, Ireland has pledged to make budgetary adjustments of 12.4 billion euros between 2012 and 2015 to push its budget deficit below 3 percent of gross domestic product by the end of the process from an estimated 10.3 percent this year.

 

  (Reporting by Padraic Halpin editing by Stephen Nisbet)

LONDON, Nov 29 (Reuters) - The British government announced sharply lower economic growth forecasts on Tuesday and warned that a recession in the euro zone could send the British economy into reverse.

  The economy was forecast to grow by only 0.7 percent next year, against a March budget forecast of 2.5 percent, finance minister George Osborne said, presenting figures from the independent Office for Budget Responsibility.

  Growth was expected to recover to 2.1 percent in 2013 but Osborne told parliament the reality could be much worse if the euro zone debt crisis was not solved.

* Fitch warns of U.S. downgrade if no budget deal by 2013

  * American Airlines parent AMR files for Chapter 11

  * Futures up: S& P 8.2 pts, Dow 57 pts, Nasdaq 8 pts

  NEW YORK, Nov 29 (Reuters) - U.S. stock index futures rose on Tuesday on investor relief over a well-received Italian bond auction that showed the highly indebted country still had access to capital markets.

  * Italy sold debt in volumes close to the upper end of its target, but borrowing costs continued to soar. European stocks reversed course to trade higher.

  * S& P 500 futures rose 8.2 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 57 points, and Nasdaq 100 futures added 8 points.

  * French bank stocks BNP Paribas and Societe Generale were down after a French newspaper reported Standard & Poor's could change the outlook for France's triple-A rating to " negative" within the next 10 days.

  * Also, Moody's said it could downgrade the subordinated debt of 87 banks across 15 European Union nations on concerns that governments would be too cash-strapped to bail them out.

  * Late Monday, Fitch revised its outlook on the U.S. credit rating to negative, citing the failure of a special congressional committee to reach an deficit-reduction agreement. Fitch gave the United States until 2013 to come up with a " credible plan" to tackle its ballooning budget deficit or risk a downgrade of the country's coveted AAA rating.

  * In company news, American Airlines parent AMR Corp filed for Chapter 11 reorganization. The shares tumbled 97 percent to 64 cents in premarket trade.

  * On the macro front, investors awaited the Standard & Poor's/Case-Shiller home price index for September, due for release at 9 a.m. EST (1400 GMT). index 20-city index is expected to show no changes in September.

  * Also the Conference Board's November consumer confidence is due at 10 a.m. EST. (1500 GMT) The report is forecast to show a reading of 44.0, up from 39.8.

  * U.S. stocks rebounded from seven days of losses on Monday as investors used the latest effort by European leaders to resolve the region's debt crisis as an opportunity to cover short positions.

* Brent up, worries about Iran, Syria sanctions support

  * Italian bond auction raises targeted amount

  * Tight supply also supporting oil (Recasts, adds fresh quotes, updates prices, previous SINGAPORE)

  LONDON, Nov 29 (Reuters) - Oil pushed above $110 a barrel on Tuesday after Italy successfully completed a closely-watched bond auction, which boosted investor confidence, lifting European stocks and the euro to a session high.

  Brent crude futures were up $1.29 to $110.29 a barrel by 1107 GMT, and U.S. crude was up 81 cents to $99.02 a barrel after pushing to an intraday high of $99.30 following the bond auction.

  Italy paid record yields of nearly 8 percent to sell its three-year paper but crucially managed to raise 7.5 billion euros, close to the top of the targeted 5 billion to 8 billion range.

  European stocks and the euro rallied on news of the result and oil prices also received a strong boost. " This is helping to restore a bit of confidence," said Simon Wardell, oil analyst at IHS Global Insight.

  Both oil contracts had drifted sideways earlier in the session, but the auction's success galvanised traders to build on Monday's strong rally.

  Brent finished up $2.60 a barrel on Monday - its biggest single day rise in a month - and U.S. crude closed up $1.44.

  Analysts and traders said oil was being supported by geopolitical risk and supply fundamentals given tight inventories in the United States.

  " We get inventory data later today and tomorrow which may show a further decline in product stocks and could lend support to crude oil prices. Brent will stay range-bound at $105-$110 a barrel," said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.

  The market is also eyeing a meeting of eurozone finance ministers to be held in Brussels from 1400 GMT.

  The meeting brings together ministers from the 17 eurozone members to agree the details of leveraging the European Financial Stability Fund (EFSF) so it can help Italy or Spain should they need aid.

  Data showed that eurozone economic sentiment had fallen more than expected in November, as business managers turned more pessimistic across almost all sectors of the economy, particularly in France and the Netherlands.

  But Christopher Bellew, a trader at Jefferies Bache in London, said that all the bad economic news had been priced in so the oil price was unlikely to be greatly impacted by anything negative coming out of the finance ministers' meeting.

  " People's expectations for demand growth in the eurozone are pretty minimal so I doubt that will affect it," he said.

  Bellew added that oil could climb if there was some strength seen in the metals markets and signs of demand improving in China.

  Wardell argued that strong fundamental factors were keeping oil prices relatively high and something " calamitous" would be needed to drive them lower.

  " We see oil prices trending sideways, but there are huge risks to the downside in the near term," he said.

 

 

 

  MIDDLE EAST TENSIONS

  Tensions around Syria and Iran are continuing to support oil prices, with some governments seeking further sanctions.

  Paris has argued that Europe should ban Iranian oil as part of Western steps to ratchet up pressure on the country, following a report by the International Atomic Energy Agency that suggested Iran had worked on designing an atom bomb.

  Diplomats say EU powerbrokers Britain and Germany support the proposal, although London is still conducting an analysis of the costs. But some EU states, led by crisis-stricken Greece, have expressed concerns about the economic impact of an oil embargo.

  An apparent explosion was heard from Iran's Isfahan city on Monday afternoon, the head of the judiciary in the province said, but the province's deputy governor denied that there had been a big blast. An important Iranian nuclear facility involved in processing uranium is located near Isfahan.

  Separately, Syria faces growing economic sanctions and condemnation over what the United Nations calls " gross human rights violations" , but President Bashar al-Assad shows no sign of buckling under pressure to end his military crackdown on popular unrest.

  China and Russia have oil concessions in Syria. Moscow also has a naval repair base on Syria's Mediterranean coast and announced on Monday that it was sending warships there in an apparent display of determination to defend its interests. (Additional reporting by Seng Li Peng in Singapore Editing by Anthony Barker)

* Jakarta, Kuala Lumpur, Bangkok end firmer led by banks

  * Mixture of optimism, caution about Europe developments

  * Jakarta, Manila, KL, Bangkok see foreign inflows

  By Shihar Aneez

  Nov 29 (Reuters) - Banking shares helped boost stock markets in Indonesia, Malaysia, and Thailand on Tuesday on hopes for euro zone recovery but others fell as investors cautiously waited to see strong steps taken in Europe.

  Optimism over euro zone recovery hopes has been eroding with investors stayed in the sidelines as Europe's finance ministers try to agree on how to bolster the European Financial Stability Facility bailout fund in a bid to stem contagion in bond markets.

  Malaysia gained 0.9 percent with a $32.2 million foreign inflow and Indonesia jumped 1.1 percent with a net foreign buying of $27.4 million, while the Philippines saw net foreign buying of $27.9 million, its highest since Aug. 9 , even though the market fell 0.4 percent.

  Thailand, which ended 0.4 percent firmer saw net foreign buying of $16.9 million.

  Singapore closed 0.2 percent weaker as investors took profits. Vietnam edged down 0.1 percent.

  On Monday, analysts said investor sentiment was dented after speculation over an Italy bailout by the International Monetary Fund proved to be wrong.

  Except Jakarta, all other markets saw trading volume on Tuesday that topped 30-day averages with Malaysia's volume hitting 1.45 times and the Philippines seeing 1.33 times its 30-day average.

  Banks led regional markets on hopes of strong credit growth.

  Malaysia, which was closed on Monday for a holiday, saw financials AMMB Holdings Bhd and CIMB Group Holdings Bhd, considered proxies of the broader market, jumping 5 percent and 4.6 percent respectively.

  Indonesia's largest lender Bank Mandiri gained 2.3 percent and Bank Central Asia, Indonesia's biggest lender by market value, rose 2 percent, Bangkok's Siam Commercial Bank adding 3.8 percent and Singapore's DBS rose 0.9 percent.

  MSCI's broadest index of Asia Pacific shares outside Japan was up 1 percent at 1017 GMT.

  (Additional reporting by Fong Min Hun in Kuala Lumpur and Singapore bureau Editing by Richard Borsuk)

  For Asian Companies click For Asia-Pacific News click For South East Asia Hot Stock reports, click

HONG KONG, Nov 29 (Reuters) - Hong Kong shares gained on Tuesday, boosted by strong gains in Chinese consumer counters, seen as relatively safer bets in difficult market conditions, with turnover weak despite hitting the highest in five sessions.

  The Hang Seng Index closed up 1.21 percent at 18,256.2. The China Enterprises Index closed up 1.08 percent at 9,714.09.

  The Shanghai Composite Index ended up 1.23 percent at 2,412.39 points, led by strong gains in material and energy names in A-share turnover that stayed below average despite hitting the highest since Nov. 18.

 

  HIGHLIGHTS:

  * Chinese consumer names led gains, with footwear retailer Belle International Holdings Ltd surging 8.8 percent in almost twice its 30-day average volume as investors rolled into the sector, seen as relatively safer in a difficult market compounded by an uncertain global macroeconomic outlook, especially for the world's second-largest economy.

  * Short-selling interest in some stocks in the sector stayed high. Despite strong gains since the Hang Seng Index manager announced in early November that Tingyi (Cayman Islands) Holdings Corp would join the benchmark from Dec. 5, short-selling has slipped below 12 percent of its total daily turnover only three times this month. (Reporting by Clement Tan Editing by Chris Lewis)