Europe Debt, Europe Debt Crisis | featured news

Greece and its bondholders have made little progress since resuming stalled talks on a debt swap, three sources close to the talks told Reuters on Thursday, with time to strike a deal and avoid a messy default running out rapidly.

The world economy will lose momentum in 2012 but it will keep moving in the right direction, according to Reuters polls of around 600 economists who said crisis-hit Europe would drag on global growth.

The International Monetary Fund said it aims to raise up to $500 billion for new loans, and said its staff estimates that countries will need about $1 trillion in loans over the coming years.

Financial markets are unlikely to be derailed by mass euro zone downgrades but with Greek debt talks at an impasse, pressure has been loaded on the bloc to shore up its defenses and glimmers of optimism from last week have been firmly doused.

Standard & Poor's ratings agency has downgraded France's credit rating, French television channels reported on Friday, citing a government source.

Greece could reach a bond swap deal with private creditors to reduce its debt load by the end of next week, with a formal offer possible by early February, a finance ministry source said on Thursday.

Stocks ended trading flat Wednesday, after steadily fighting their way back from an initial drop early in the session. Worries about the European economy seemed to weigh on investors.

European Central Bank policymaker Athanasios Orphanides called for euro zone leaders to abandon plans to make private sector investors help reduce Greece's debts, but his push showed no sign of gaining any traction in Europe's capitals on Friday.

Stocks rose sharply on the first trading day of 2012 as upbeat U.S. economic data overshadowed continuing concerns about the European debt crisis.

Greece faces another tough year in 2012 but must stick to its program of austerity and reform to stay in the euro, Prime Minister Lucas Papademos said in a pre-recorded New Year's Eve address.