The Federal Reserve has opted to leave monetary policy unchanged and continue with Operation Twist at least until the new year, amid signs the world's largest economy has been expanding.

If Greece leaves the euro, banks across the Continent will suffer "horrifying" consequences, with a run on banks worse than anything seen before, said M&G's bond star Jim Leaviss.

DEBT CRISIS BLOG

The FTSE 100 sold-off in early trading as optimism over the EU's latest deal to tackle the crisis faded and investors dumped risk assets.

Fidelity's Anthony Bolton is expecting a slowdown in inflation to boost equity markets in China next year, following a sell-off which has hurt performance in 2011.

Insurance giant Friends Life has hired the former LV= fixed income team to run portfolios at its new asset management business.

The Bank of England has overestimated the impact of quantitative easing on gilt yields, the Bank for International Settlements (BIS) has said.

After a momentous year for government debt, during which it far outstripped the majority of asset classes, managers have moved to take profits from positions in several major debt markets.

Actions taken by the European Central Bank this week, combined with the EU's efforts to sign a new treaty, have made it too risky to be underweight bank bonds in Europe, Kames Capital's fixed income team has said.

European leaders have abandoned plans for bondholders to bear the brunt of sovereign debt collapses, following talks overnight to tackle the eurozone crisis.