Here's my summary of the key news overnight, including comments from Germany's Bundesbank that it was critical of talk the European Central Bank (ECB) would buy European government bonds to calm financial markets.
The comments may unsettle the optimism that had calmed markets in recent weeks after the ECB President Mario Draghi commented he would 'do whatever it takes' to save the euro, triggering talk the ECB would launch an unlimited bond buying spreee to push down Italian and Spanish bond yields.
However Spanish and Italian bond yields fell on optimism about the bond buying plan sparked by yesterday's Der Spiegel report that the ECB would consider a plan at its September 6 meeting to launch unlimited bond buying targeting caps on bond yields. The ECB rejected the suggestion in the report that it had already made a decision, but was careful not to say it would be considered. See more here on the rejection.
Meanwhile, the Greek crisis continues to bubble away with Der Spiegel reporting Greece would have to find another 14 billion euros in cuts over the next two years to satisfy its donors. See more here at BBC.
Elsewhere, Chinese stocks fell to a 1 month low after the Peoples Bank of China said in its own newspaper it did not plan another Reserve Ratio Requirement cut in the short term. See more here at Bloomberg.
See our article and video from last night on how China's hard landing will affect Australia.
The Dow closed flat, erasing earlier losses, while European stocks ended down around 0.2%.
The New Zealand dollar was broadly unchanged at 80.9 USc in early morning trade.