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With light trading volume expected due to the U.S. Thanksgiving Day holiday on Thursday, intraday swings are likely to be wide and frequent as traders instantly react to headlines out of Europe.

In addition, a 12-member "super committee" in Congress has until midnight on Wednesday to strike a deal involving tax increases and spending cuts to rein in federal spending. Investors are concerned that failure to reach a deal would result in automatic reductions that would harm the fragile recovery.

But with Wall Street poised for a technical rebound after finishing the worst week in two months last week, some say there are a lot of variables that could spark a rally.

If the super committee can come up with a workable deficit-reduction plan and if progress can be made in Europe, "the stage could be set for a fourth-quarter rally that might surprise even the most bullish traders," said Randy Frederick, managing director of trading and derivatives for Schwab in Austin, Texas.

"Of course, those are some mighty big 'ifs.'"

GERMAN BUNDS

European debt yields, an important risk barometer for investors these days, have shown exceptionally high correlation to equities. For the past several weeks, stocks have quickly reacted to moves in Italian, Spanish and French yields.

Now, there could be a new worry in German Bunds.

"We do have a new uncertainty that has gotten a bit of attention over the past few days and that is the sell-off in the German Bund market. There has been heavy selling by Asian real money investors in Bunds the last few days," said Chuck Retzky, director of the futures division of Mizuho Securities USA in Chicago.

"The Bund market is considered to be one of the safe havens for investors' money in the world and if that should show a significant crack and the selling pressure continues, then people will worry if U.S. Treasuries will see a similar sell-off in the future," he said.

On Friday, the Dow and S&P erased losses as the yield on Spanish 10-year bonds eased.

Spanish elections set for Sunday could help support a rise in the euro against the dollar in the very near term because the opposition party, which is seen as favoring austerity measures, is expected to win.

TECHNICALLY SPEAKING

The S&P 500 .SPX fell 3.8 percent last week, ending its worst week in two months, but the index closed above its 50-day moving average near 1,200, showing signs of strength to move higher.

"Our expectation is that the recent market sell-off is not the beginning of a whole scale, multimonth downside collapse, but rather is likely the latter stages of a pause following a surge in October, and another upside rally attempt will develop shortly," said Robert Sluymer, an analyst at RBC Capital Markets in New York.

"The overall technical set-up has not materially changed in the past few weeks."

Last week, the Dow Jones industrial average .DJI fell 2.9 percent and the Nasdaq .IXIC lost 4 percent.

This week's economic data includes existing home sales for October on Monday and third-quarter preliminary GDP report on Tuesday. On Wednesday, durable goods orders, personal income and outlays and weekly jobless claims are due. The markets will be closed on Thursday for Thanksgiving.

(Reporting by Angela Moon; Additional reporting by Doris Frankel in Chicago; Editing by Kenneth Barry)

Monti easily won confidence votes in record time in both houses of parliament last week, just days after his predecessor Silvio Berlusconi lost his majority and quit -- the latest EU premier to fall victim to the Europe-wide economic emergency.

The new government of technocrats, supported by almost all Italy's main parties, will focus first on enacting austerity measures passed by Berlusconi that aim to balance the budget in 2013 and halt the rise in Italy's monumental debt pile.

But with the economy looking certain to slow, additional measures will be needed and Monti, who is also economy minister, spent his first hours in office reviewing the latest data.

Italian newspapers said on Sunday that new budget measures were likely to be unveiled within two weeks, with a property tax abolished by Berlusconi set to return, plus moves to tackle tax evasion and a cut in payroll taxes to lift employment.

As the broad outlines of his program emerge, Monti will travel to Brussels on Tuesday for talks with Herman Van Rompuy, president of the European Council, and Jose Manuel Barroso, president of the European Commission.

On Thursday he will have lunch in Strasbourg with French President Nicolas Sarkozy and German Chancellor Angela Merkel.

Europe's two main powerbrokers showed growing exasperation with Berlusconi, believing he had failed to grasp the severity of the crisis, and there was obvious relief in Paris and Berlin over the arrival of Professor Monti, a former EU commissioner.

"Up until now Italy was part of the problem, now it is part of the solution," said Daniel Gros, the head of the Center for European Policy Studies in Brussels.

EUROBOND DIVISIONS

But Monti will find himself at odds with Merkel over ways out of Europe's financial crisis, which has roiled markets and raised fears for the future of the euro single currency.

While Germany has rejected calls for common euro zone debt issuance, Monti enthusiastically endorsed the measure before taking office, writing in the Financial Times in July that eurobonds "are the only answer to Europe's crisis."

He is only likely to make headway on this issue if he can show Europe that he has a firm grasp on Italy's finances and a clear vision of how to cut its debt, currently running at a perilous 120 percent of gross domestic product.

Although he secured huge support in last week's vote from a parliament spooked by a sudden jump in Italian borrowing costs, he could face a battle as he tries to win backing for greater austerity or implementing a pledge to liberalize the hidebound economy.

Berlusconi said on Sunday he expected Monti to stay in office until the end of the legislature in 2013. While he was ready to back a new property tax, Berlusconi warned that other measures, such as a mooted wealth tax, were not acceptable.

"The government is made up of highly competent technocrats. That does not mean they have carte blanche on everything. We will be very attentive on every single measure," he told Corriere della Sera newspaper.

"Monti cannot ignore us. (My party) is the biggest party in parliament and will be an irreplaceable point of reference for this government," he added.

(Editing by Tim Pearce)

"The one thing that we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic," Wang was quoted by the official Xinhua news agency as saying at the weekend.

Wang's comments were the most bearish forecast ever by a top Chinese decision-maker about the world economy, and Beijing's worry about a worsening global environment could translate into an impetus for pro-growth policies at home.

China launched a massive fiscal stimulus package with a price tag of 4 trillion yuan ($650 billion) in late 2008 to avert a big impact from the global financial turmoil.

According to Xinhua, Wang did not speak this time about any major policy change but reiterated that banks should be more flexible lending to the agricultural sector and small firms.

"As for our country, which relies highly on external demands, we must see the situation clearly and get our own business done," Xinhua quoted Wang as saying, referring to exports.

China's central bank, which sometimes has to report to Wang, who is in charge of China's financial sector, said last week that it is ready to fine-tune monetary policy if needed.

At a meeting of local government officials and financial executives in the central province of Hubei on Saturday, Wang said local financial institutions such as city commercial banks and credit cooperatives should not seek to expand their business beyond their regions.

Wang also urged banks to pay close attention to the international financial situation. Xinhua did not give further details.

(Reporting by Zhou Xin and Benjamin Kang Lim; Editing by Paul Tait)

If succesful, a bid would make the U.S. investment bank one of the largest shareholders in the venerable London institution -- one of the few exchanges to still operate an open outcry ring -- with a stake of just under 11 percent.

"There are multiple parties involved," one of the sources told Reuters, requesting anonymity. "It'll be done in the short term I believe," the source said.

A sale of MF Global's 4.7 percent stake could shift the odds in the takeover battle for the LME, the world's biggest metal market, which has thrown its doors open to a potential 1 billion pound ($1.6 billion) takeover.

Goldman Sachs is also a large shareholder in the LME. Two likely contenders for the 1877-founded group are the Chicago Mercantile Exchange and the IntercontinentalExchange.

Selling the stake would also be boost for creditors of the futures brokerage, which filed for bankruptcy protection last month, and for its clients, some of whom have seen their positions frozen ever since.

The whereabouts of about $600 million of customer funds unaccounted for since MF Global went under is still unclear, and it remains an open question whether the group might have improperly mixed these funds with its own.

KPMG has told MF Global's clients they will get back much-needed funds before on an interim basis, saying on Friday it was likely to make first distributions before finally liquidating or transferring all risk positions.

J.P. Morgan, which already holds a 6.2 percent stake in the LME, declined to comment, as did KPMG, the administrator of MF Global's UK arm. The news of the wide interest for the stake was first reported by the Financial Times.

(Reporting by Douwe Miedema)

The comments probably do not signal an imminent widening of the yuan's daily trading band, but they underscore Beijing's intention to introduce two-way fluctuations in the yuan to dampen expectations that China's currency could only appreciate.

Pointing to recent bets in overseas markets that had caused the yuan to hit the bottom end of its trading band a number of times, Wen said such fall in the yuan "could not have been engineered."

"China will continue to closely monitor the yuan's trading movements ... and will strengthen yuan's trading flexibility in either direction," the premier was quoted as saying in an evening news bulletin on state broadcaster CCTV.

Wen also told U.S. President Barack Obama that the trade imbalance between the two countries was a structural issue and that maintaining the healthy development of bilateral trade was essential for both countries and the world, according to the broadcast.

Wen's comments on the yuan were in line with recent central bank moves to encourage the yuan's value to fluctuate more widely within the daily trading band. The People's Bank of China (PBOC) allows the yuan to rise or fall 0.5 percent from its daily mid-point.

Some analysts and traders have argued that the central bank has been laying the groundwork for a widening of the trading band, which would allow China to say in the face of renewed U.S. pressure over the yuan that it is indeed moving ahead with reform to loosen its grip on the currency.

But other analysts believe that China will opt to widen the trading band only when upward pressures on the currency ease in line with a narrower trade surplus and lower capital inflows -- in other words, no time soon.

China's yuan currency -- also known as the renminbi -- has gained about 40 percent in real effective exchange terms since Beijing abandoned its peg to the U.S. dollar in 2005.

Chinese leaders have repeatedly rejected calls from the United States and other rich countries to allow faster yuan appreciation.

Analysts said China appears to have quietly adjusted its currency policy in response to the deepening euro zone debt crisis, slowing the yuan's steady appreciation while trying to nip speculation of yuan depreciation.

The balancing act comes as inflationary pressures come off the boil and economic growth slows in the world's second-largest economy, giving Beijing more room to fine-tune policy.

White House officials said earlier in the day that Obama reiterated currency concerns to Wen during the meeting, which was held on the sidelines of a regional summit in Indonesia.

(Reporting by Fayen Wong; Editing by Don Durfee)