Five world markets themes in coming week

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

1/ TEMPERING APPETITE

Positive Q3 earnings surprises from a majority of U.S. and European firms have not been enough to push stocks significantly higher. A renewed focus on banking sector fragilities has tempered risk seeking and what regulators might do as conditions "normalise." That guarantees interest in EU finance ministers' Tuesday discussions on exit strategies for the support measures that were extended to the financial sector. Reactions to results next week from banks (Barclays, Credit Agricole, Unicredit in Europe) and retailers (Wal-Mart, JC Penney in the U.S.) will show whether book-keeping considerations before year end are beginning to outweigh the hunt for a good home for the liquidity that central banks have been pumping into the system.

2/ LIQUIDITY CONSIDERATIONS

Most major central banks this week made it clear that they don't want to make the year-end problematic by prematurely withdrawing liquidity from the system. Nevertheless, market liquidity is already being affected as end-2009 draws closer. Money market conditions in the coming weeks, and the possibility that the ECB's long-term refinancing operation may not be repeated next year, will influence demand at the European Central Bank's December one-year tender and the performance of assets that have benefited from the central bank cash flowing through the system.

3/ RELATIVE PERFORMANCE

Flash euro zone Q3 GDP data (preceded by German and French releases) is expected to prove a better reflection of improving PMIs than UK GDP turned out to be and will shape expectations of when the ECB will begin to withdraw excess liquidity. Such considerations will drive euro/sterling and the gilt/Bund spread, which has been widening -- and all the more so given the BoE Inflation Report next week will shed more light on the BoE's view on the mid-term inflation outlook, why it opted to expand its QE programme, and just how long it expects the economy to require its support.

4/ DEBT PILES

G20 countries have been clear they don't want to withdraw fiscal measures too hastily but the need to formulate credible fiscal exit strategies is becoming ever more pressing. The scale of the problems facing some euro zone countries were made clear by Fitch's downgrade of Ireland and new Greek premier George Papandreou saying his government needed to save the country from bankruptcy. Markets are already jumpy and will become ever less tolerant as QE unwinding draws nearer and firmer 2010 sovereign debt issuance plans/numbers highlight how much supply will flood the market.