LONDON (AP) Stocks in Europe and the US traded in narrow ranges yesterday as bond market investors fretted about Europe’s debt crisis and, increasingly, over the scale of US borrowing following President Barack Obama’s agreement with the Republicans to extend tax cuts for all Americans.

In Europe, the FTSE 100 index of leading British shares closed down 13.92 points, or 0.2 percent, at 5,794.53 while Germany’s DAX fell 26.04 points, or 0.4 percent, to 6,975.87. The CAC-40 in France ended 21.48 points, or 0.6 percent, higher at 3,831.98.

As the US deficit comes into focus, there’s been an easing in the bond markets of the more highly indebted countries in Europe following indications that the European Central Bank is taking a more active role in the crisis, through bigger purchases of government bonds.

So far, the ECB’s bond buying appears to be doing the trick buying bonds supports their prices, taking pressure off the banks that hold them. It also lowers bond yields, which indicate the borrowing costs countries would face were they to go into the market for more credit.

Portugal is one country that will be breathing a huge sigh of relief as the yield on its ten-year bonds has slid below six percent from just above seven percent a week ago, while Ireland’s government will be comforted that the passage of its budget Tuesday, which includes €6 billion of austerity measures, has pushed Irish bond yields down by 0.13 percentage point to 7.83 percent.

However, Europe’s debt crisis has not magically gone away and there’s been mild disappointment in the markets that two days of discussions between Europe’s finance ministers in Brussels did not yield much more than a commitment to make bank stress tests more rigorous and comprehensive.

Investors are also keeping a close watch on developments in China, amid mounting market talk that the country’s monetary authorities are planning to raise interest rates soon possibly this weekend in an attempt to rein in inflationary pressures and cool a property-related credit boom.

Given that backdrop, it’s unsurprising that Chinese shares dropped. The benchmark Shanghai Composite Index lost one percent to 2,848.55 while the Shenzhen Composite Index for China’s smaller, second market dropped 0.3 percent to 1,305.25.

Elsewhere, South Korea’s Kospi slipped 0.4 percent to 1,955.72 and Hong Kong’s Hang Seng lost 1.4 percent to 23,092.52.

Japan’s Nikkei 225 stock average bucked the trend, adding 91.23, or 0.9 percent, to 10,232.33 as the yen continued to weaken against the dollar to the relief of the country’s exporters.

Benchmark oil crude for January delivery was down 51 cents at $88.18 a barrel in electronic trading on the New York Mercantile Exchange. The contract hit $90.76 on Tuesday, the highest price since October 8, 2008.