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After three sessions of wild swings on commodities markets, oil and copper rose, but gold fell further to stand about $300 below the record of more than $1,920 an ounce it scaled in early September.

Turbulence on global markets since late July has been driven by investors' twin fears of renewed recession in the United States, and the chaos that Europe's sovereign debt crisis could inflict on the financial system if it continues unchecked.

European Central Bank policymakers said on Monday that officials were working to increase the firepower of the region's rescue fund in their latest effort to staunch a crisis that U.S. President Barack Obama said was "scaring the world.

U.S. markets reacted positively, finishing more than 2 percent higher on Monday .DJI .SPX, and the mood continued in Asia, where Tokyo's Nikkei .N225 rose 1.6 percent, coming off its lowest close in more than two years. .N .T

MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS rose 1.5 percent, after plumbing its lowest levels in 16 months on Monday.

Whilst senior ECB officials confirmed the 440 billion euro rescue fund would likely be increased in size, there were also hints from policymakers that the central bank could cut interest rates next month, reversing a hike earlier this year in a move already expected by markets.

"Markets are getting more confident around some action plan in Europe, which is positive, but on the other side, markets are also looking for more policy easing from the ECB, which is negative," said Greg Gibbs, currency strategist at RBS in Sydney.

"The combination of both will leave the euro caught in the middle somewhere."

The single currency traded around $1.3485, down about 0.4 percent on the day, after rallying from an eight-month low of $1.3360 on Monday.

On commodities markets, Brent crude oil rose 0.6 percent to $104.55 a barrel and U.S. crude gained 0.9 percent to $80.95.

Copper, which ended Monday up 2 percent after falling more than 6 percent at one stage, rose 1.2 percent on Tuesday to $7,356 a tonne.

Gold, which has been hammered in recent days by selling by hedge funds to cover losses elsewhere in portfolios, slipped 0.4 percent to around $1,620 an ounce.

(Additional reporting by Cecile Lefort in Sydney; Editing by Daniel Magnowski)

Obama, saying the crisis "is scaring the world," urged leaders of the 17-nation euro zone to act quickly to help a region where banks have not fully recovered from the 2008 financial crisis and which is now suffering from the Greek government's debt crisis.

"They are trying to take responsible actions but those actions haven't been quite as quick as they need to be," Obama told a citizens' meeting in Mountain View, California.

After meeting at the IMF/World Bank and G20 meetings in Washington D.C. last week, European policymakers said on Monday they are working on ways to shore up the euro zone financial system and prevent the region's government debt crisis from spreading, but their mixed messages on the size of a rescue fund and the role of the ECB underscored the difficulties for 17 euro-zone nations in reaching consensus.

ECB Executive Board member Lorenzo Bini Smaghi, speaking in New York, said that the 440 billion euros in the bailout fund, known as the European Financial Stability Facility (ESFS), could be used as collateral to borrow from the European Central Bank making more money available for crisis fighting, but it was up to European Union governments to decide how to do this.

"I know that people are thinking about these things. They may not be willing to admit it in the public, but they are thinking about these things," he said, citing the example of two U.S. programs used to recapitalize banks in the 2008-09 financial crisis.

Officials are examining "how to leverage the money out of the EFSF in a more innovative and efficient way," he told a conference organized by Medley Advisors.

But Germany's central banker Jens Weidmann poured scorn on a beefed-up bailout fund. Leveraging the assets could discourage politicians from taking the tough political decisions to cut budget deficits and would weaken faith in the euro, Weidmann said in Washington.

"A bazooka! I don't think it is a recipe that works in Europe," he told the American Council on Germany.

Markets are not concerned about the size of the rescue fund, rather about the political capacity to deliver, he said

"This is a very dangerous thing. It means you completely blur the responsibility between fiscal and monetary policy."

Germany's Finance Minister Wolfgang Schaeuble speaking in Berlin also ruled out increasing the size of the fund although he had said in Washington over the weekend that leverage without tapping the ECB was possible.

A senior European official told Reuters on Saturday that the aim was for a five-fold leverage to give the fund the firepower to help bigger economies such as Italy and Spain if necessary. Analysts have estimated that 1-2 trillion euros is needed to achieve that goal and win market confidence.

ECB Governing Council member Ewald Nowotny from Austria said at a Harvard University forum in Massachussetts on Monday that an increase in the fund was likely, but it "might not be a trillion (euros).

Investors are anxious to see a plan big enough to backstop European banks and help debt laden euro zone governments. U.S. stocks jumped when CNBC television reported that a detailed plan was in the works to leverage the fund up to eight-fold and to use the European Investment Bank to issue bonds and buy up sovereign debt of troubled countries via the ECB.

An EU official in Brussels involved in crisis resolution dismissed the CNBC report as "just bizarre." The official said talks are in the early stages and those with the EIB involve infrastructure projects.

PRESSURE

In Germany, Chancellor Angela Merkel pressed for the European Union to strengthen its power to discipline member states that break fiscal rules. Budget deficits are the primary source of Europe's debt crisis and Germany's key concern.

"There should be the right to declare such budgets null and void...otherwise we will not get out of the situation," she said in her strongest language yet on common EU fiscal powers.

Germany's legislature is due to vote this week on expanded EFSF powers and leaders are seeking to quell concerns the new bailout fund would discourage countries from cutting deficits.

Europe came under fierce pressure from the United States and other major economies at weekend talks in Washington to take swift action to stop Greece's debt woes from engulfing bigger euro zone states and harming the world economy.

But officials said reports that planning was already in place for a 50 percent write-down in Greek debt and a vast increase in the euro zone rescue fund were highly premature.

"There is no change to the framework we are working on," said a euro zone official who is involved in decision-making on financial assistance to Greece, Ireland and Portugal.

"All this talk of a specific haircut for Greece or an enlargement of the EFSF, it is all just speculation. We are not working along those lines," said the official.

Merkel, struggling to convince her fractious center-right coalition to back a strengthening of the EFSF in a crucial vote on Thursday, warned that letting Greece default would destroy investor confidence in the euro zone.

Diplomats said any talk of a fallback plan for Greece that would raise the cost to German taxpayers could only make her task more difficult in parliament this week.

DEFAULT WITHIN MONTHS?

Private economists and Brussels think-tanks expect a Greek debt default within months, coupled with a capital injection for European banks and a leveraging up of the EFSF.

Euro zone officials acknowledge that such policy ideas are circulating, but insist planning continues on the basis that Greece's debt burden, which is close to 160 percent of GDP, can be sustained as long as its government cuts its fiscal deficit as demanded by the European Commission, the European Central Bank and the International Monetary Fund, the so-called troika.

Treasury Secretary Timothy Geithner warned this weekend that inadequate European crisis management heightens the threat of "cascading default, bank runs and catastrophic risk that must be taken off the table." IMF chief Christine Lagarde, also made clear the euro zone needs to act more decisively, notably to recapitalise banks on a large recapitalizescale.

Quietly, euro zone policy makers accept that a combination of a much deeper Greek debt restructuring allied to coordinated bank recapitalizations and a bolstered rescue fund would make sense, but such a plan would require support from all 17 euro zone countries which can take time in the EU.

"The ideas are all there, but it's not as straightforward as just sitting down and deciding it," said another euro zone financial official involved in handling the crisis.

"Many of us can agree privately that anything less than a 50 percent haircut for Greece would just be cosmetic, but getting that decided by all and implementing it is not so easy."

(Additional reporting by Alister Bull in California, Lesley Wroughton in Washington, Marc Jones in Washingotn, Ros Krasny in Boston and John O'Donnell in Brussels; Writing by Stella Dawson, Paul Taylor; Editing by Catherine Evans and Leslie Adler)

The Commerce Department said on Monday sales slipped 2.3 percent to a seasonally adjusted 295,000-unit annual rate.

The reading was in line with analysts' forecasts and does little to allay fears the United States could slip back into recession.

The median price of sales slipped 8.7 percent from July, with weak incomes and a moribund job market keeping households wary of investing in a new home.

The report keeps pressure on the Federal Reserve and President Barack Obama to do more to help the sputtering economy. The Fed last week unveiled new measures to try to ease credit further for homebuyers.

"Sales of new homes are still very depressed," said Gary Thayer, a strategist at Wells Fargo Advisors in St. Louis, Missouri.

"There's no sign yet that low mortgage rates are helping the housing sector," he said.

The U.S. economy slowed sharply in the first half of the year and looks vulnerable to any escalation in the European debt crisis.

U.S. stocks pared gains after the data, with global equities up on hopes that Europe was tackling Greece's debt woes.

Still, the government raised its estimate for July's sales pace to 302,000 units from the previously reported 298,000 units. Also, the supply of homes available on the market dropped to a record low.

Economists polled by Reuters had forecast a 295,000-unit rate of new sales for single-family homes in August. In the year through August, sales rose 6.1 percent.

Data last week showed new construction of U.S. homes fell in August, dragging on economic growth.

"The housing sector can't get any worse," said Michael Englund, an economist at Action Economics in Boulder, Colorado.

(Additional reporting by Ellen Freilich in New York; Editing by Neil Stempleman)

* Chevron Corporation (CVX.N) on Monday gave the go ahead for its A$29 billion ($28.4 billion) Wheatstone liquefied natural gas project in Western Australia, seeking to tap into growing Asian demand with its second LNG export project in the country.

* August U.S. new home sales figures will be released at 1400 GMT, while the Chicago Fed index for August is due at 1230 GMT.

* Boeing's (BA.N) long-awaited 'dream' machine became a commercial reality on Sunday when the first of its lightweight plastic-composites 787 Dreamliner aircraft was formally delivered to its first customer.

* Netflix Inc (NFLX.O) has won a deal to pipe Dreamworks Animation (DWA.O) movies starting in 2013, the first time a major Hollywood studio has chosen Internet streaming over traditional pay TV, The New York Times said on Sunday.

* Combining two drugs from Novartis (NOVN.VX) and Pfizer (PFE.N) to treat post-menopausal women with a certain type of advanced breast cancer more than doubled the time they lived without their disease getting worse, study data showed on Monday.

* About 4,200 workers at Freeport McMoran Copper & Gold's FXC.N Indonesian mine, mainly contractors and non-union staff, have returned to work, allowing some mining to resume, but around 8,000 remain on strike, the firm's spokesman said on Monday.

* Alere Inc (ALR.N), the U.S. medical diagnostics firm involved in a 460-pence hostile takeover for Axis-Shield (ASD.L), lowered its acceptance threshold, as it looks unlikely that the U.S. firm will win over enough shareholders for a full takeover.

* An intensifying legal battle between Samsung Electronics Co (005930.KS) and Apple Inc (AAPL.O) is expected to crimp growth at one of the fastest growing businesses of the Korean company, while threatening to worsen business ties with the firm's largest customer.

* Coca-Cola (KO.N) plans to invest close to $3 billion in Russia over the next five years as part of its strategy to build its presence in big and fast-growing emerging markets, Chief Executive Muhtar Kent told Reuters Insider television.

* Forecasts for third-quarter earnings for the S&P 500 companies have slipped to 13.7 percent growth from 17 percent, according to Thomson Reuters data.

* After a weekend of being told by the United States, China and other countries they must get more aggressive in their crisis response, European officials focused on ways to beef up their 440 billion-euro ($595 billion) rescue fund.

* Europe's efforts to ramp up its fight against the euro zone debt crisis could potentially trigger credit rating downgrades in the region, a top Standard & Poor's official warned.

* The International Monetary Fund said on Sunday its inspectors would likely return to Athens this week after getting written assurances on a new wave of austerity measures announced by Greece to resolve the debt crisis.

* European shares pared early losses on Monday and turned positive as recently-hammered banks bounced back, eclipsing sharp losses in mining shares, hit by fears over a global economic slowdown. The FTSEurofirst 300 .FTEU3 index of top European shares was up 0.4 percent.

* On Friday the Dow Jones industrial average .DJI gained 37.19 points, or 0.35 percent, to 10,771.02. The Standard & Poor's 500 Index .SPX gained 6.83 points, or 0.60 percent, to 1,136.39. The Nasdaq Composite Index .IXIC gained 27.56 points, or 1.12 percent, to 2,483.23. ($1=0.740 Euros)

(Reporting by Atul Prakash; Editing by Greg Mahlich)

European policymakers began working on new ways to stop fallout from Greece's near-bankruptcy from inflicting more damage on the world economy after stinging criticism for failing to stem the debt crisis.

European equities fell, while industrial commodities such as crude oil and base metals bore the brunt of investor desire for cash in the face of mounting uncertainty.

In the last three days alone, gold has fallen by nearly 10 percent in its largest three-day slide since February 1983 and implied volatility has risen to a 2-1/2 year high.

Spot gold was last down 3.0 percent on the day at $1,621.49 an ounce by 0903 GMT, having fallen earlier by as much as 7.4 percent, putting the difference between the intraday high and low at $128.40, the largest daily price swing on record.

"It shows you that at times of extreme stress, there is not a suitable substitute to liquidity and although gold is liquid by metal standards, in comparison to treasuries, when you get this kind of flight to cash, then it really is cash that counts and that means U.S. dollars," said Credit Suisse analyst Tom Kendall.

"The markets are going to continue to react this week to the political situation within Europe and I don't see any quick resolution or stimulus coming to the markets."

After a weekend of being told by the United States, China and other countries that they must get more aggressive in their crisis response, European officials focused on ways to beef up their existing 440 billion-euro rescue fund.

Deep differences remained over whether the European Central Bank should commit more of its massive resources to shoring up Europe's banks and help struggling euro zone member countries.

INVESTORS RUN

The lack of consensus on a lasting solution to the euro zone debt crisis has been a major driver in this year's rise in the gold price to record highs above $1,900 an ounce.

"The rise in volatility taking place in the gold price was clearly an indication that gold was no longer a low-risk asset. So there are a few signs there that would have given you pause for thought, but inevitably when the move happens, everyone is taken a little bit by surprise," said Natixis commodities strategist Nic Brown.

"I would suggest that part of what is happening is a collective move away from commodities by investors. The fact that there is carnage going on across the commodities spectrum indicates there are a fair few investors who are getting cold feet at this stage and that has hit some precious metals disproportionately," he said.

Last week's data on investment in U.S. gold futures shows speculators cut their holdings to their lowest level in over two years, as reflected by the fall in net non-commercial open interest on COMEX.

Short-term interest rates on dollars and other major currencies, have shot up this month, as banks have become increasingly unwilling to extend funding to each other because of fears over their individual exposure to the debt of the peripheral euro zone nations.

Gold is often sold off as a means of raising dollars when funding conditions deteriorate, much as they did in late 2008 with the onset of the credit crunch that ensued from banks withholding lending because of their concern over counterparty exposure to toxic U.S. mortgage-backed assets.

"Gold is one of the few assets that remains in positive territory this year, in a sense it is one of the last assets standing, and because of this as investors head for cash they sell the assets that have performed. Essentially gold is a victim of its own success as liquidity trumps," wrote UBS analyst Edel Tully in a note.

Silver came under fire, falling by as much as 16 percent at one point in the day and set for its worst three-day fall on record, having lost more than 25 percent in this period.

The spot price was last down 4.9 percent at $29.54 an ounce, its lowest since last November.

Platinum fell by more than 3 percent to $1,543.75 an ounce, its lowest since May last year, while palladium fell 0.3 percent to $627.97 an ounce, its lowest since last October.

(Editing by James Jukwey)

European policymakers began working on new ways to stop fallout from Greece's near default, focusing on ways to beef up their existing 440-billion-euro rescue fund.

But deep differences remained over whether the European Central Bank should commit more of its massive resources to shoring up Europe's banks and help struggling euro zone member countries.

Concerns over the potential effect from Greece's possible default, especially on the banking sector, and worries over a U.S. economic slowdown have been weighing on world stocks, fanning safety-seeking flows into top-rated government bonds.

"Overall it's still an inconclusive situation -- no tangible action plan coming out of the weekend gathering so the net result will still be risk aversion," said Rainer Guntermann, strategist at Commerzbank.

MSCI world equity index fell 1.1 percent, having hit its lowest since July 2010 on Friday. The index has fallen more than 23 percent since hitting a three-year high in May and is also down 17 percent since January.

European stocks lost 0.8 percent while emerging stocks hit their weakest since September 2009.

"The lurch lower in risk appetite can only reflect a growing fear that policymakers will be incapable of acting in time or with sufficient potency to turn things around," said Herv Goulletquer, analyst at Credit Agricole.

U.S. crude oil dropped 1.8 percent to $78.40 a barrel.

Bund futures were up nine ticks before trimming gains.

The dollar was steady against a basket of major currencies.

The euro fell as low as 101.90 yen and hit an eight-month low of $1.3361.

(Additional reporting by Emelia Sithole-Materise; Editing by Toby Chopra)

After a weekend of being told by the United States, China and other countries that they must get more aggressive in their crisis response, European officials focused on ways to beef up their existing 440 billion-euro rescue fund.

Deep differences remained over whether the European Central Bank should commit more of its massive resources to shoring up Europe's banks and help struggling euro zone member countries.

Shares and the euro fell in Asia on Monday as investors reacted cautiously to the weekend news. Financial markets have plunged in recent weeks on concerns about the ability of Europe to get a grip on the crisis.

U.S. Treasury chief Timothy Geithner, in unusually blunt comments, said the risks from Europe were enormous.

"The threat of cascading default, bank runs, and catastrophic risk must be taken off the table," he said in speech to the International Monetary Fund on Saturday.

Europe came under more pressure on Sunday when a top IMF official said the ECB was the only player big enough to "scare" financial markets, which have punished many euro zone members.

"The ECB is the only agent that can really scare the markets," Antonio Borges, the IMF's top official for Europe, told top economic policymakers from around the world.

However, Germany and many top officials within the ECB itself are wary about the central bank being drawn more deeply into supporting Greece and other debt-stricken states.

"It is not helpful that we have an avalanche of new proposals every week," ECB Governing Council member Ewald Nowotny said.

Markets fear that European banks could be dragged down by their exposure to Greece and other debt-strapped euro zone nations, and analysts say a bailout fund of around 2 trillion euros would be needed if the crisis spread to Italy and Spain.

A senior European official hinted that kind of firepower was being contemplated.

"We need to find a mechanism where we can turn one euro in the EFSF into five, but there is no decision on how we could do that yet," the official said.

Financial markets signaled some doubts that bolder steps would emerge soon given a lack of details from weekend comments and differences between euro zone leaders.

Ratings agency Standard & Poor's raised further doubts, suggesting that efforts to bolster the rescue fund would potentially trigger ratings downgrades in the euro zone region.

Asian shares trading outside Japan fell 2.3 percent to a 16-month low and the dollar index was up for the fourth session in a row.

"We believe this type of plan would be seen as a credible solution to the crisis," said Warren Hogan, chief economist at ANZ Bank in Sydney.

"However, this plan is still only in the 'rumor' stage, and it may face some tough hurdles in order to be passed by all EU authorities, indeed headlines are already suggesting some German dissent."

GREECE MEETS IMF IN BID FOR MORE CASH

Greece, the country at the epicenter of the crisis, is trying to secure its latest wad of cash from international lenders including the IMF next month to avoid a default.

Finance Minister Evangelos Venizelos, speaking to bankers in Washington, said Greece was determined to stay the course of its tough austerity plan to meet terms of its bailout package.

He complained the outside world did not understand the severity of the measures that Greece is taking by cutting pensions, salaries and public spending but he insisted the country will "make it" through the crisis.

In Athens, Greek riot police fired tear gas at anti-austerity protesters pelting them with bottles outside parliament in the first such unrest after a summer lull.

"Greece is not the scapegoat of the euro area or the international economy," Venizelos said.

But IMF and European negotiators are frustrated at what they say is Greece's slow reform pace.

Venizelos met IMF chief Christine Lagarde on Sunday and afterward the IMF said a mission would head back to Greece possibly as soon as this week to assess progress.

The European Union and IMF have already bailed out Greece, Portugal and Ireland, and officials want to stop the crisis from spreading to Italy, Spain and possibly beyond.

ERECTING DEFENSES

The European Union's top economic official, Olli Rehn, said on Saturday that as soon as the region's governments confirm new powers for the bailout fund -- the European Financial Stability Facility -- attention would turn to how to get more impact from the existing money.

The new powers are expected to be ratified by mid-October. Germany's parliament votes this week on them.

Germany opposes contributing more money to help countries it sees as profligate and the focus has now turned to ways to leverage the existing bailout fund, possibly through the ECB.

Klaus Regling, who heads Europe's bailout program, said leveraging the fund's resources did not necessarily need to involve the ECB.

One top ECB official said Europe might follow the lead of the United States, which rewrote its financial rule book to cope with the 2007-2009 credit crisis.

ECB executive board member Lorenzo Bini Smaghi said there could be a European equivalent of the U.S. TARP program, which helped shore up the shaky banking system, or the TALF, which provided some liquidity to parched U.S. credit markets.

"I think both scenarios can be followed.... I think that these two options could solve the problem," he said.

A former U.S. policymaker summed up the frustration voiced by many investors and commentators.

"In Europe, they've kind of turned this into a bad Monty Python skit, where, you know, the guy comes out and says, 'We need to act,' and the next one says, 'You're right, let's draft -- no more talking..., 'I second the motion. Let's start doing something,'" said Austan Goolsbee, formerly chief White House economic advisor.

"I mean, they're not actually doing anything. They just keep agreeing that they're going to work in concert."

(Reporting by Reuters' IMF team in Washington; writing by Glenn Somerville and William Schomberg; Editing by Chizu Nomiyama, Tim Ahmann and Neil Fullick)

Dreamworks CEO Jeffrey Katzenberg told the newspaper the deal, worth $30 million per picture to Dreamworks over a number of years, was "game-changing" and represented a bet that viewers would soon no longer make distinctions between content streamed on the Internet or through cable.

The Netflix deal means Dreamworks -- the studio behind family friendly fare from "Shrek" to "Kung Fu Panda" -- is eschewing premium pay-TV operator HBO in favor of online streaming, the Times reported. HBO is a unit of Time Warner Inc. "We are really starting to see a long-term road map of where the industry is headed," Katzenberg was cited as saying to the newspaper in an interview.

The content agreement comes days after Netflix, which has seen its share price decline sharply after a series of missteps, sealed an agreement to broadcast TV shows from Discovery Communications Inc.

Netflix needs to add more content to its streaming service to keep drawing in new customers and fend off competition from the likes of Amazon.com, Google Inc and Apple Inc.

Shares of the one-time Wall Street darling have fallen 50 percent in two months. Netflix CEO Reed Hastings has apologized for failing to explain moves adequately, from a surprise price hike in July to a separation of its DVD-mail from streaming services, and the company is trying to win customers back.

But adding customers is suddenly proving difficult, with Netflix on the receiving end of heated complaints from customers still upset over the price hike announced in July.

It cut its subscriber forecast by 1 million, saying it now expected to have 24 million subscribers at the end of the third quarter. The last time Netflix reported a subscriber decline was the second quarter of 2007, when Blockbuster was aggressively pushing a DVD rental package called Total Access.

According to the Times, Netflix was quick to pump up the Dreamworks deal.

"This is one of the few family entertainment brands that matter," Chief Content Officer Ted Sarandos was quoted as saying. "It's also a signal to people that we are in no way moving away from movies. Our programing is just reflecting more and more what people want."

Netflix and Dreamworks were not available for comment.

(Reporting by Edwin Chan; Editing by Peter Cooney)