By David Gaffen

(Reuters) – Global bond market funds were the biggest winner in 2011, as investors seeking safety poured more than $110 billion into fixed-income funds, according to data from fund tracker EPFR Global released on Friday.

U.S. bond funds had the single largest amount of inflows as tracked by EPFR, at $62.3 billion, a good thing for investors who responded to the year’s volatility by staying away from stocks and commodities.

The U.S. benchmark 10-year Treasury returned about 17 percent for the year, outperforming most other debt markets, including German bunds, corporates, and high-yield bonds.

Most classes of bond funds saw inflows, save for European bond funds, as investors fled from the increased sovereign risk in those markets. European bond funds posted outflows of $29.8 billion in 2011.

The U.S. stock market went nowhere fast in 2011, but for fund investors that was enough late in the year; investors put money in U.S. equity funds for the eighth week of the last 10. EPFR showed equity funds overall took in $412 million for the week ended December 28.

“Institutional investors actually committed over $50 billion to the U.S. funds we track,” said Brad Durham, managing director of Cambridge, Massachusetts-based EPFR Global. “While retail investors were in full retreat from U.S. equities in 2011, institutional investors were a pillar of support that helped the S&P 500 index get back to the general vicinity of its starting point for the year.”

By David Gaffen

(Reuters) – Should the euro zone debt crisis drag the continent into a recession, states and regions in the United States would not be immune to the fallout across the Atlantic, a report said on Wednesday.

Europe is a significant trading partner with the United States, particularly states such as New York, California and Texas, the three most populous – and among the largest issuers of municipal debt – in the country.

According to a white paper from eBooleant Consulting, those states contributed a large percentage of the $1.3 trillion in exports to Europe in 2010.

“What’s going on in Europe is not going to stay in Europe – it looks progressively worse,” said Philip Fischer, managing principal at eBooleant Consulting, an economics consultancy in New York.

Although the largest percentage of the New York metropolitan area’s exports is to Asia rather than the European Union, slowed growth in the EU would have an impact on both the city and New York State, Fischer said. The effect would be “material but manageable.”

The biggest state exporter to Europe is California, and the largest cities that export to Europe are New York, Houston and Los Angeles. Fischer, formerly the head of Municipal Bond Research, said some credit spread widening in municipal names could be seen as a result.

NEW YORK (Reuters) – The EU summit is on. No, wait, it’s off. No, hold on, the summit is on, and what’s more, now there are two of them.

The daily headlines out of Europe are enough to make a long-term investor’s head spin and more importantly, to keep them out of the market altogether.

Markets have see-sawed all week on frequent and sometimes contradictory reports on the success or lack thereof of European leaders to deal with their region’s debt crisis.

Stocks have risen on the mere suggestion of a hint of progress, with investors afraid of missing the rally that will follow if politicians finally come up with a solution.

Volume has been muted, generally spiking on sudden rallies and sell-offs. It’s a sign investors are avoiding real investment decisions and chasing rallies in what has been a tough year so far.

“People have been burned by reacting to individual news stories only to have them refuted, withdrawn or contradicted,” said Stephen Massocca, managing director at Wedbush Morgan in San Francisco. “It’s really kind of wait and watch, which is why the volume is so low.”

Trading activity has largely been the province of professional traders pinging stocks and other asset classes back and forth using futures, ETFs and blue-chip issues.

NEW YORK (Reuters) – One day after Pennsylvania’s state capital filed for bankruptcy, the city lawyer handling the case defended against allegations the move was illegal.

Harrisburg is one of a handful of municipalities that has flirted with bankruptcy in the wake of the Great Recession that devastated budgets in state and local communities. Some say it could become a touchstone for whether other cities will follow this path to extract concessions from creditors and others.

In an interview with Reuters Insider on Thursday, Mark Schwartz, an attorney for the city council, said the Chapter 9 filing was “absolutely” legal, rejecting charges from the mayor and the surrounding county that the council did not have the authority to take such a step.

The Pennsylvania capital’s crisis has been a year in the making. The city of about 50,000 is hampered by $300 million in debt incurred from an expensive revamp of its incinerator and is struggling to fund key city services.

On Thursday, Charles Zwally, special council for Dauphin County, where Harrisburg is located, said the county is weighing its options.

“We’re reviewing it now and we’re advising the county…We don’t believe that they are authorized to file,” he said.

The barriers for municipalities to file bankruptcy are high. Less than half of U.S. states authorize a city or county to undertake such a move, and such cases have been dismissed in the past.

NEW YORK (Reuters) – Oil prices slipped and world stocks rose on Monday above recent 11-month lows on hopes the conflict in Libya could be ending as energy shares higher after last week’s equity market selloff.

U.S. stocks jumped at the open, led by Exxon Mobil Corp, which rose 2 percent. Investors, however, offset buys of risky assets by continuing to buy gold. Persistent worries that the sovereign debt crisis in euro zone peripheral countries may spread to bigger economies in the region encouraged flows into gold, pushing it to another record high.

The cost for euro zone banks to borrow money from one another rose again on Monday, heading back toward their highest levels since late 2008, as U.S. banks remained wary of lending to European counterparts in the face of the intractable debt crisis.

Brent crude oil fell 1.6 percent. The potential for a restart of Libyan oil flows into the market if the Gaddafi regime collapses weighed on the benchmark oil price. If Libyan production comes back it would ease gasoline prices, a potential boost to economies worldwide.

Libyan government tanks and snipers put up scattered resistance in Tripoli after rebels swept into the heart of the capital, cheered on by crowds hailing the end of Muammar Gaddafi’s 42 years in power.

The Dow Jones industrial average was up 171.80 points, or 1.59 percent, at 10,989.45. The Standard & Poor’s 500 Index rose 19.24 points, or 1.71 percent, at 1,142.77. The Nasdaq Composite Index gained 53.62 points, or 2.29 percent, at 2,395.46.

European stocks rose 1.8 percent.

NEW YORK (Reuters) – After the terrible rout in markets on Thursday investors spoke of holding fast and even poking around for buying opportunities, but that’s hard when the market is likely facing another weak U.S. jobs report on Friday.

Markets’ sentiment has swung dramatically in the last few days as investors price in another recession and an unsuccessful battle by euro zone politicians to halt an expanding sovereign debt crisis.

With the Standard & Poor’s 500 index down 11 percent in ten days, some investors might think it’s time to jump back in with two feet. Not this time. Not yet.

“The last time people were terrified was two-and-a-half years ago — that was a great time to be greedy,” said Rob Arnott, chairman of Research Affiliates of Newport Beach, California, who oversees $80 billion.

But markets are not terrified yet.

“A day like today is going to lead people to be awfully rattled — but terrified? No,” he added.

The last time the S&P fell so far, so fast occurred in March 2009, the end of a run of panicked selling before the market went on a tear that saw the S&P double by April 2011.

NEW YORK (Reuters) – U.S. stock futures jumped and the dollar rebounded in a sign of relief that U.S. lawmakers were moving closer on Sunday to a deal that would allow the country to continue to borrow money and head off a devastating short-term default.

The Swiss franc, the favored safety currency during this crisis, pulled back from record highs against the dollar, and gold slipped off all-time peaks.

With two days remaining until the United States exhausts its ability to borrow money, legislators said a deal was becoming more likely, but they had some way to go before reaching agreement.

Markets were moving in anticipation of good news. The S&P 500 futures bounced 19.8 points, or 1.5 percent, to 1,307.40. Gold, which has reached new heights during the stalemate, lost $16.59 to $1,610 an ounce.

Senate Democratic Leader Harry Reid said he hopes to hold a Senate vote on Sunday night on an emerging deal to raise the U.S. debt ceiling.

The S&P 500 fell every day last week, losing 3.9 percent. The CBOE Market Volatility Index , a gauge of investor fear, jumped as much as 9 percent on Friday to its highest level since mid-March before paring its rise.

“At this point, the markets are perceiving that a deal and a vote will be announced,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

NEW YORK, July 24 (Reuters) – U.S. stock futures fell and gold hit a new record on Sunday as Washington was no closer to raising the U.S. debt ceiling to avert a devastating default.

The decline in equity futures points to a poor open for U.S. markets and shows investors are getting increasingly worried about the failure of legislators to coalesce around one approach that will resolve the stalemate that is unnerving investors.

“The fact that they seem to be jumping from one type of proposal to another and not converging on anything is beginning to worry markets,” said Steven Englander, head of G10 FX strategy at Citigroup.

In Asia, Japan’s Nikkei index was down 0.5 percent in Monday morning trade.

S&P 500 futures fell at the outset of electronic trading. The benchmark S&P SPc1 was down 0.8 percent, or 11 points, at 1,330.20.

Gold rose to $1,614.71 an ounce, just off a new record for the precious metal reached earlier in the session, as it has been a favored asset of those seeking safety from declining U.S. assets.

Currency trading also showed investors moving away from the U.S. dollar, with the biggest drop in the greenback coming against the Swiss franc. The dollar dropped to 0.8153 against the Swiss franc , down 0.4 percent.

NEW YORK (Reuters) – Wall Street futures fell and the dollar dropped as Washington appeared no closer to raising the debt ceiling in order to avert a devastating default.

S&P 500 futures fell at the open of electronic trading as investors grew increasingly worried at the lack of progress. The benchmark S&P was down 1 percent, or 14 points, to 1326.00.

Early currency trading suggested a move away from the dollar, with the biggest drop in the greenback coming against the Swiss franc. In early Asian trading, the dollar dropped to 0.8121 against the Swiss franc, down 0.7 percent.

The decline in futures points to a poor open for U.S. markets.

White House officials and Republican leaders scrambled on Sunday to reassure global markets the United States would avert a debt default, but the two sides were still not close to a deal. House Speaker John Boehner told fellow Republicans on a conference call that a large-scale debt deal was not possible with President Barack Obama.

An aide to Senate Majority Leader Harry Reid told Reuters on Sunday the Nevada senator was outlining a plan that would cut $2.5 trillion in spending and increase the debt limit that he hoped would be brought to the Senate floor this week.

Earlier in the day, White House Chief of Staff Bill Daley warned that there would be a “few stressful days” ahead for financial markets.

NEW YORK (Reuters) – Spreadtrum Communications Inc (SPRD.O: Quote, Profile, Research, Stock Buzz) shares fell sharply on Tuesday, but later rebounded after noted short-selling researcher Muddy Waters said it was shorting the stock, claiming a “high risk” of misstatements in the Chinese semiconductor maker’s financials.

Unlike other firms targeted by Muddy Waters, Spreadtrum’s sell-off has not been as harsh.

Spreadtrum shares slid more than 30 percent after Muddy Waters said in an email that it was most concerned about the company’s 2010 and 2011 numbers. But buyers emerged by midday and the shares recovered most of their losses to close at $12.49, down 3.5 percent on the day.

Calls to Spreadtrum’s office in San Diego were routed to an answering machine and there was no answer at the company’s offices in Zhangjiang, China. Company officials did not respond to messages.

Bearish bets have been increasing in the last several days in the options market, said Gareth Feighery, a founder of Philadelphia-based options education firm MarketTamer.com, with put options volume far outweighing call volume.

“This disproportionately large volume of put trading relative to call trading is indicative of bearish sentiment among options traders,” he said.

Spreadtrum is the latest U.S.-listed Chinese company to be hit hard following a report questioning its accounting practices. The shares are down 32 percent on the year.