What would have been a quiet holiday week for markets has been hijacked by global events, as tensions between the Koreas ignited global fear trade, while Europe’s contagion also spooked. Here’s what to expect Wednesday.

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Dollar Strengthens as Markets Watch Korea, Ireland & Data

This year’s rescue plans for Greece and the euro zone were driven partly by rising US anxiety about the risks to global financial stability stemming from Europe’s slowness to take action. The FT reports.

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How Washington Pushed Europe to Save the Euro

Fees paid to lawyers and accountants for unwinding Lehman in the US and Europe are on track to surpass $2 billion even after some of the legal services have been provided at discounted rates. The FT reports.

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Fees for Unwinding Lehman Brothers to Pass $2 Billion

German gross domestic product growth hit its highest level since re-unification in the second quarter but the rest of Europe is struggling.

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Does German Growth Feed on PIGS Weakness?

The European Central Bank will face pressure on Thursday to say whether Europe-wide stress tests on banks will be tough enough to convince markets of their worth but is likely to offer little beyond soothing words.

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ECB Seen Keeping Cool Under Stress Test Grilling

U.S. economic activity improved nationwide last month, but worries about Europe’s debt crisis dented confidence, the Federal Reserve said in its Beige Book collection of anecdotal reports.

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Beige Book: US Economy Continues to Improve Modestly

The weakening euro could continue to strong-arm markets in the week ahead, as investors worry about contagion from Europe’s sovereign debt crisis and the potential for a bigger setback in the U.S.

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Week Ahead: All Eyes on Europe’s Sovereign Debt Crisis

A huge ash cloud from an Icelandic volcano turned the skies of northern Europe into a no-fly zone on Thursday, stranding hundreds of thousands of passengers.

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Volcanic Ash Turns North Europe into No-Fly Zone

Investors are likely to stay uncertain in the coming week, with investors focused on Europe’s sovereign credit woes in the short term, and a world with less government-induced stimulus in the long term.

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Week Ahead: Europe, Stimulus, the Fed Have Stocks on Edge

Wall Street will keep a cautious eye on Europe in the week ahead, as the global credit crisis proved it still carries a potent sting for markets.

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Week Ahead: Market Still Feels Sting of the Credit Crisis