YEREVAN (Reuters) – Armenian President Serzh Sarksyan accused Azerbaijan on Friday of threatening a new war over the territory of Nagorno-Karabakh disputed by the south Caucasus neighbors.

Azerbaijan is accumulating a “horrendous quantity” of arms in preparation for a resumption of fighting, Sarksyan, 58, told Reuters in an interview. He said Armenia wanted a negotiated settlement to the conflict and that he would spare no effort to achieve it.

HAY-ON-WYE, Wales (Reuters) – Syrian poet Faraj Bayrakdar’s daughter was just three when he was arrested in 1987 for his political activism. By the time he was released in a presidential amnesty she was at university.

As the international community continued to wrestle with efforts to stop escalating violence in Syria that a U.N. official has described as a civil war, Bayrakdar detailed the personal cost of opposing Syria’s ruling Assad family to book lovers at Britain’s top literary festival in the Welsh town of Hay-on-Wye.

LONDON (Reuters) – A bailout of Spanish banks agreed at the weekend won’t necessarily make it cheaper for the country to borrow on government bond markets, meaning Madrid may need to seek further international financial help.

With the loans potentially increasing Spain’s debt by up to 100 billion euros ($125 billion) and possibly ranking ahead of regular government debt in the queue for repayment, the sovereign’s already elevated borrowing costs could come under more pressure to rise than fall.

LONDON (Reuters) – Greek voters’ rejection of pro-bailout political parties in Sunday’s election has raised the chances of Greece leaving the euro but this unprecedented step is seen as manageable rather than catastrophic for the currency bloc.

Some banks have raised estimates of the likelihood of Athens quitting the euro. But after a year of investors shedding bonds issued by highly indebted euro zone countries and big injections of central bank cash, they said the damage could be contained.

LONDON (Reuters) – Greek voters’ rejection of pro-bailout political parties in Sunday’s election has raised the chances of Greece leaving the euro but this unprecedented step is seen as manageable rather than catastrophic for the currency bloc.

Some banks have raised estimates of the likelihood of Athens quitting the euro. But after a year of investors shedding bonds issued by highly indebted euro zone countries and big injections of central bank cash, they said the damage could be contained.

LONDON (Reuters) – Following are five big themes likely to dominate the thinking of investors and traders in the coming week, and Reuters stories related to them.

1/ (NEARLY) OUT OF TIME

Markets should know in the coming week whether Greece is to receive the next tranche of bailout funds it needs to avoid running out of money. While expectations are that Athens will secure the lifeline, an eventual default is widely forecast and priced in. The question for financial markets is therefore what happens next. With policymakers viewed as running to keep up with the deepening crisis, votes in Germany and several other countries on boosting the powers of the EFSF euro zone bailout fund will be closely watched. Yet Greece remains the focus of an intractable crisis that continues to take a toll on stock markets around the world, choking interbank lending markets and keeping yields on the safest and most liquid government bonds near record lows. The euro zone’s troubles, along with the Fed’s downbeat economic outlook and its warning of strains in financial markets, have exacerbated a sell-off which has extended from developed markets to emerging ones. The specter of capital flight from emerging markets has seen the emerging markets’ outperformance that was evident earlier this year crumble in recent weeks and analysts are warning that this — like so much else — will get a lot worse before it gets better.

LONDON, Jan 5 (Reuters) – Euro zone debt issuance got off to
a solid start to 2011 on Wednesday as Germany sold 3.9 billion
euros of bonds and Portugal raised 500 million euros from
short-term bills, but analysts warned tougher tests lay ahead.

Euro zone states have heady supply in the pipeline for the
first two months of this year totalling some 175 billion euros,
according to Barclays Capital. Any sign of waning investor
demand would see yields rise and reignite worries over the most
indebted countries’ ability to fund themselves.

LONDON (Reuters) – European shares rose on Monday in the first trading session of 2011, led by German automaker Porsche, while the euro fell against the dollar on concerns the euro zone sovereign debt crisis could resurface soon.

German government bond futures rose but pared earlier gains as stocks bounced and after stronger-than-expected euro zone manufacturing data.

LONDON, Nov 28 (Reuters) – A bailout for Ireland agreed by
European Union finance ministers on Sunday may spark a short-
term relief rally in Irish debt and the euro but will not remove
the risk of the crisis spreading along the euro zone periphery.

Analysts said the 85 billion euro rescue package for Ireland
and the approval of broad outlines of a permanent crisis-
resolution mechanism were unlikely to reduce pressure on yields
on government debt issued by Portugal and Spain, seen as the
next weakest links after Ireland among the 16-member euro zone.