LONDON, Nov. 23 (MNI) - The overnight spike higher in the price of gold, extending in early European dealing, provided risk currencies a boost allowing cable to extend its recovery off Friday's lows of $1.6460 to $1.6629. Sterling was holding off its best levels ahead of the New York open but the underlying tone remained positive.

STERLING SUMMARY: Opened early Europe at $1.6543, stg0.9033

Early system demand for dollars acted to take the rate to session lows of $1.6474. The spike up in gold (talk of large $1200 expiring calls on Comex) reversed the early risk off tone and allowed the rate to rally back to $1.6537. The rate then settled between $1.6500/35 during the Asia afternoon before picking up a late bid tone that extended the recovery to $1.6552. The rate dipped to $1.6530 into the European session before again picking up fresh demand, with the rate pushing on to $1.6573 as risk was given additional boost from a continuing advance in gold. The rate dipped back to $1.6555 before picking up further demand interest, this time lifting it on to $1.6605. Offers at $1.6605/10 restricted the upside for a short while before another push took the rate on to $1.6620 (38.2% $1.6879/1.6460). The dip toward $1.6600 prompted another round of demand that raised it to $1.6629 before momentum faded. The rate dropped back to $1.6575 before slowly recovering.

UK: Releases in the UK Monday, * BOE Paper Moots Capital Surcharges To Smooth Credit Cycle - The Bank of England moots the possibility of using capital surcharges to smooth out volatile credit cycles in a Discussion Paper on Macroprudential Policy issued over the weekend. The paper also discusses the possibility of imposing the surcharges on banks or financial institutions engaged in particularly risky behaviour or sectors. The BOE says such an approach could quell 'overexuberance' by raising capital requirements during a credit boom, and help to increase bank lending during a bust by easing them.

UK: Press pick-ups in the UK Monday, * UK PRESS: Britain's biggest banks would have to raise tens of billions more pounds to achieve complete independence from state support, new research has shown, the Telegraph reports Monday. Calculations from the OECD have uncovered the full scale of the reliance of too-big-to-fail banks on taxpayers, the paper says. To become true stand-alone institutions, they would have to raise their core capital ratios above 20pc. Britain's banks are currently operating with ratios of 8pc-10pc, a level considered by regulators to be conservative, the paper says. * UK PRESS: Confidence among British businesses has risen to a six-year high, a new survey suggests today, boosting hopes that the recession is over, the Times reports. The Business Confidence Monitor, compiled by the Institute of Chartered Accountants (ICAEW), climbed to 24.6 for the fourth quarter, up from 4.8 in the third quarter. This is the highest reading since the series began in 2003, the paper says. * UK PRESS: Richard Lambert, director general of the CBI, has called for the creation of a new breed of institution to finance smaller businesses after a survey by the lobby group found that credit is still hard to secure, the Telegraph reports. * UK PRESS: RBS is poised to spark a diplomatic row with Ireland by attempting to dump stg 7 billion of toxic loans into the Irish "bad bank", the Times reports. Stephen Hester, the RBS chief executive, is expected to lodge an application to join Ireland's National Asset Management Agency (Nama) within the next few weeks through its Ulster Bank subsidiary, the paper says.

- John Webb London bureau (44 207) 634 1628 jwebb@marketnews.com

Rates in London Trading TIME EURO-USD USD-YEN CABLE EURO-YEN EURO-STG 0600 GMT 1.4944 88.83 1.6543 132.74 0.9033 0700 GMT 1.4928 88.83 1.6537 132.60 0.9027 0800 GMT 1.4957 88.69 1.6562 132.65 0.9031 0900 GMT 1.4975 89.00 1.6583 133.27 0.9030 1000 GMT 1.4978 88.88 1.6628 133.12 0.9007 1100 GMT 1.4980 88.83 1.6618 133.07 0.9015