Euro zone summit

Euro zone summit

IT Wed, Oct 26
 

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  • This event has now ended
  • 12:23
    Welcome to the Irish Times live blog on the European summit. We'll be keeping you up to date with events as they happen this afternoon, as the euro zone struggles to solve the ongoing debt crisis.
  • 12:24
    The summit is due to start at about 4pm Irish time, with a gathering of all 27 EU leaders, followed at 6.30pm by the meeting of the euro zone heads of state.
  • 12:34
    Financial markets are waiting for news from the summit, with Wall Street set to open higher, helping lift European stock out of a tight trading range.
  • 12:34
    The euro remains above the relatively firm $1.39 level for the moment.
  • 12:34
    The Iseq is trading at 2671.02, a 0.6 per cent gain on the session.
  • 12:43
    We welcome any comments you might have on today's events.
  • 12:50
    German Chancellor Angela Merkel has told her parliament that European leaders should agree on what would amount to a 50 per cent write down of Greek debt from the private sector. She has vowed to push for workable, long-term solutions.

    But she warned Greece would need the support of the European Union for some time to come and that no overnight fixes were in sight.

    "We will do all we can to get Greece back on its feet as soon as possible," she said, adding: "A debt write down alone will not solve Greece's problems ... structural reforms must still be implemented."
  • 13:33
    U.S. stock index futures are up, as optimism about corporate earnings offsets concerns about the summit.

    Some coment:

    "This entire crisis still comes down to Italy and Spain and their ability to grow their economy and cut their debt over the next few years. The EU is still awaiting a letter today specifically from Italian officials on how they plan to do so," said
    Peter Boockvar, equity strategist at Miller Tabak + Co in New York.
  • 13:40
    Around the markets, gold and silver are both slightly higher. The FTSE100 is at 5,545.71, a rise of 0.37 per cent. The Dublin market, meanwhile is almost 1 per cent up over the session, at 2679.21.
  • 13:48
    Earlier today, Taoiseach Enda Kenny told the Dáil Ireland is positioning itself as the euro zone's recovery story and is anxious to ensure higher private sector losses on Greek debt do not spook sentiment towards Irish bonds.

    "We don't want to see the hard-won progress we have made undermined by events beyond our control," he said. "We remain vulnerable to negative developments and .. there is a shared interest in ensuring that we are adequately protected."
  • 13:51
    According to a draft statement, European Union governments will signal readiness to back banks with guarantees to avert a credit freeze but give no overall figure for recapitalising lenders.

    The EU leaders will pledge to inject fresh capital into weak banks if necessary, but will allow up to nine months to see if the banks can raise the money through private means, the draft says.
  • 14:00
    There are fights breaking out in Italy's parliament.
  • 14:01
    At least two deputies from the Northern League, which is part of the ruling centre-right coalition, fought with members from the opposition FLI party of speaker Gianfranco Fini.

    They had to be separated after grabbing each other by the throat.
  • 14:02
    Unsurprisingly, the parliamentary sitting was suspended for several minutes.
  • 14:02
    What caused it? According to Reuters "sarcastic remarks on television by Fini alleging that the wife of League leader Umberto Bossi had retired at 39".
  • 14:07
    We welcome your comments, by the way.
  • 14:10
    In less dramatic news, incoming European Central Bank president Mario Draghi said there are "significant" downside risks to the economic outlook in the euro area.

    Draghi is taking over from Jean-Claude Trichet as head of the ECB on November 1st. He could come under pressure to cut interest rates.

    "The risks of a weakening of growth prospects are significant, in the context of strong uncertainty," Draghi said in a speech in Rome today, citing slowing world demand, a drop in consumer and business confidence and the region's sovereign debt crisis.
  • 14:13
    That's uplifting, isn't it?
  • 14:20
    As expected the German parliament has approved a plan to increase the capacity of the European bailout fund, the EFSF, giving Chancellor Angela Merkel a clear mandate before she departs to Brussels. The Bundestag, voted 503 in favor of
    the measure; 89 voted against, while four abstained.
  • 14:23
    German Chancellor Angela Merkel casts her vote in the Bundestag on the expansion of the EFSF
    German Chancellor Angela Merkel casts her vote in the Bundestag on the expansion of the EFSF
  • 14:28
    Ciars Hooray!
  • 14:28
    Guest Whats the chances of Draghi being allowed to drop ECB rates by .5% in the November meeting? Is that a realistic thought or will it we a .25% cut in December or even January as previously mentioned. Niall Homan
  • 14:30
    Ray Kinsella The world is collectively holding its breath on the outcome of this conference. We are the economic recovery story for Europe, we have worked hard to earn this but there is more recovery to be done. We now need work work to do now on European unity. Europe unity has been damaged by the events of the past 18 months, we need people to see decisions being made at European level again, that the Europe project is back on track.
  • 14:30
    Niall - Would seem unlikely that Mario Draghi would cut rates as much as that at his first meeting. But events could well overtake him.
  • 14:42
    That approval by the German lower house of parliament has lifted stocks.

    The Standard and Poor's 500 Index added 0.9 per cent to 1,239.61 at .9.31am in New York. The Stoxx Europe 600 Index increased 1.1 per cent and shares in emerging markets gained for a fourth day. The euro strengthened 0.4 per cent to $1.3956 and 10-year US Treasury yields fell four basis points to 2.16 per cent.
  • 14:57
    Bank of America Merril Lynch says in a note to clients: " We expect today's Eurozone summit to only buy time, leaving many issues open and the periphery exposed to further shocks"
  • 15:20
    Siobhain ONeill The thoughts of a double dip recession make me both hungry and depressed...off to the fridge I go
  • 15:21
    The FTSE 100 is now up 0.42 per cent at 5,549.00. The Iseq, meanwhile is up 0.8 per cent, at 2675.93
  • 15:34
    Rachael Haughey I was playing FTSE with ISEQ all afternoon. Wasn't expecting anything to go up though.
  • 15:34
    Kieran Magennis Have players and the ordinary public become so fatigued through taking risk reduction measures, or just plain worry, that this has become a factor in the general inertia and stagnation?
  • 15:34
    Harry Meneely Siobhan ONeill i think you've come up with the answer...force all the ministers to keep eating tonight until they arrive at a solution!!!
  • 15:36
    The Nasdaq has turned negative, but this is due to Amazon.com weighing on the market. The company issued a far weaker-than-expected outlook for the holiday season due to heavy spending for its new Kindle Fire tablet computer.
  • 15:43
    Siobhain ONeill I'm not surprised Amazon's outlook is poor, I'm spending less than I used to on tablets...
  • 15:43
    Tony Can anybody explain how increasing the firepower of the EFSF will convince markets not continue to go after Spain and Italy? I dont get that . . .
  • 15:53
    Harry Meneely I hope Amazon don't blame me...i'm still taking the fire tablets..i expect to spontaneously combust any minute...
  • 16:10
    Tech heavy Nasdaq is down 1 per cent but the Dow and S&P 500 are both moderately positive
  • 16:13
    In London the FTSE 100 is now down 0.3 per cent to 5,508.62, after swinging between gains and losses more than 10 times today. Bloomberg suggests investors are reacting to reports the European Union has suspended talks with banks on bondholder losses as part of a Greek rescue
  • 16:16
    The red carpet is out and European leaders are arriving for talks in Brussels
  • 16:17
    IMF president Christine Lagarde arrrives at the crisis summit in Brussels
    IMF president Christine Lagarde arrrives at the crisis summit in Brussels
  • 16:20
    European Central Bank executive board member Juergen Stark claims he's hopeful a decision on bank recapitalization will be reached tonight. "Hopfeully this evening there will be a decision on recapitalization of banks that need to be recapitalized," Mr Stark said at an event in Germany, according to Bloomberg. "That is the decisive point to break the vicious circle."
  • 16:56
    The pan-European FTSEurofirst 300 index of top shares provisionally closed up 0.1 percent at 983.16 points. It seems better-than-expected US data and corporate results just about offset diminishing expectations for the EU summit.
  • 16:59
    The FTSE 100 has turned positive but it's not so good elsewhere in Europe with the German Dax and French CAC 40 down by 0.5 per cent and 0.1 per cent respectively
  • 16:59
    Greece's Prime Minister George Papandreou arrives at the crisis summit
    Greece's Prime Minister George Papandreou arrives at the crisis summit
  • 17:03
    Siobhain ONeill " FTSE ....swinging between ....10 times today." Sounds like office christmas party season is here
  • 17:03
    Harry Meneely Why are banks worried about bondholder losses....there's always the respective tax payer on the bottom rung...as always,they'll stump up.
  • 17:04
    Harry Meneely Oh goody..a decision on bank recapitalization..whoopsy diddly do...this is just another exercise in semantics..we all know where that money is coming from....yet come Christmas,the upper echelons of these same banks will have their grubby mits out grabbing their "bonuses"...topsy-turvey land...
  • 17:08
    Canada has been one of the few economies to emerge unscathed from the global economic crisis but could the euro zone problem drag it down?

    The Bank of Canada has painted a darker picture of the domestic economy as it looks to the likelihood of a recession in Europe and continuing weakness in the US. In its quarterly Monetary Policy Report published today, the central bank slashed its fourth-quarter growth forecast to an annualised 0.8 per cent from 2.9 per cent, down from a likely 2 per cent in the third quarter.
  • 17:15
    Guest So the banks are first looking to recapitalize, so they can lend out more cash and keep the great ponzi scheme going. Great news for the bankers, but isnt it all supposed to be about deleveraging?
  • 17:21
    Harry Meneely Stephen Speilberg wanted to make a movie about the euro crisis..when the money men saw the script they shook their heads...Jurassic Park we can accept but this is too far fetched...
  • 17:22
    Reuters are citing an EU official as saying talks with banks on bondholder losses as part of a second Greek bailout are deadlocked. That would seem to rule out any chance of EU leaders announcing a comprehensive package that convinces markets. As Reuters reports: "The Greek deadlock darkens the summit's prospects, since deals on recapitalizing banks and bolstering the €440 billion rescue fund hinge on steering debt-laden Greece back toward financial health"
  • 17:23
    US stocks have erased early gains with the Dow and S&P well off their highs and the Nasdaq negative.

    The Dow Jones is up 57.03 points, or 0.49 per cent, at 11,763.65. The Standard & Poor's 500 Index is up 1.91 points, or 0.16 per cent, at 1,230.96. The Nasdaq Composite Index iss down 10.31 points, or 0.39 per cent, at 2,628.11.
  • 17:24
    Mike And if the Greeks banks do get a 50% haircut on their losses, do the mortgage holders get a 50% as well?
  • 17:43
    Increasingly looking like there will be a 50 per cent haircut on Greek bonds in the second bailout. Troika looking for 60 per cent while banks are saying it should be 40 per cent.
  • 17:48
    The FTSE-100 index at the close was up 27.70 at 5553.24. In Dublin, the Iseq also closed higher, up 11.26 points to 2666.04.

    The German Dax and French CAC 40 finished the day down 0.5 per cent and 0.1 per cent respectively.
  • 18:09
    Nouriel Roubini, the US economist who called the US sub prime crisis and the resulting recession has on Twitter called for Italian premier Silvio Berlusconi to resign "High time for Berlusconi to put his country's interest above his personal ones and quit. Government change long overdue for many months now"
  • 18:50
    Hard to have much empathy for them, but spare a thought for Europe's heads of state. In a normal year they would tend to meet about five or six times. Since the beginning of 2010, however, at least 17 summits and countless bilateral meetings have been held to try and deal with the euro zone's problems. Will the latest one lead to anything concrete being announced? Hopefully we'll know later tonight...
  • 18:54
    Channel 4 presenter Jon Snow is tweeting from Brussels where the euro zone meeting is being held. He's suggests that things are not looking good on a deal.

    He tweeted a short time ago: "No figures likely tonight and if leaders DO agree...it will merely be parameters for a deal"
  • 19:06
    Julian Callow, chief European economist with Barclays in London says Italy's ability to implement fiscal austerity and reduce its debt burden is crucial to ending the euro-zone debt crisis. "If Italy is in difficulties and is in need of financing from the rest of the euro area, the rest of the euro area can't really stump up enough capital to support that," Callow told Bloomberg today. "Italy is the key thing to address because of its size and because of these unstable debt dynamics, with interest payments that have started to emerge." Unfortunatelty what we're hearing is, that despite the dressing down from Merkel and Sarkozy on Sunday, the plan Berlusconi brought back tonight falls far short of expectations.
  • 19:18
    Bloomberg is reporting French President Nicolas Sarkozy plans to call Chinese President Hu Jintao tomorrow to discuss China contributing to a planned euro-area investment vehicle, citing a person familiar with the matter.
  • 19:27
    British prime minister David Cameron told reporters this evening that "good progress" had been made on a plan to recapitalise Europe's banks and an agreement been reached.
  • 19:29
  • 19:35
    EU leaders proposing a Europe wide bank guarantee to help them raise funds themselves
  • 19:36
    European banks will have to achieve a core capital ratio of 9 per cent and have until
    June 30th next year to achieve this
  • 19:36
    Banks should be subject to constraints regarding the distribution of dividends and bonus payments until the target has been attained.
  • 19:37
    Banks should first use private sources of capital, including through restructuring and conversion of debt to equity instruments. If necessary, national governments should provide support , and if this support is not available, recapitalisation should be funded via a loan from the EFSF in the case of Eurozone countries.
  • 19:56
    The euro slipped against the dollar this evening but was well above session lows after thedraft euro zone statement was released. The euro briefly traded above $1.39 following news of the statement but declined again as the announcement said details of the plan will only be decided in November.
  • 19:58
    US stocks have also rallied following the release of the statement from EU leaders. The Dow Jones industrial average rose 140.13 points, or 1.20 per cent, to 11,846.75. The Standard & Poor's 500 Index gained 10.43 points, or 0.85 per cent, to 1,239.48. The Nasdaq added 8.90 points, or 0.34 per cent, to 2,647.32.
  • 20:23
    Reuters is reporting that Euro zone leaders intend to multiply the capacity of their rescue fund (the EFSF) to €1 trillion. But it says that details of how they plan to draw a line under the worsening debt crisis will not be nailed until next month
  • 20:24
    Harry Meneely "details of the plan will only be decided in November"...can...road...sound familiar?
  • 21:13
    US stocks ended higher today as the slow progress from European leaders in resolving their debt crisis was enough to satisfy investors, even if the first reports from the EU summit were short on detail.

    The Dow Jones industrial average finished up 160.45 points, or 1.37 per cent, at 11,867.07. The Standard & Poor's 500 Index was up 12.91 points, or 1.05 per cent, at 1,241.96 and the Nasdaq closed up 11.77 points, or 0.45 per cent at 2,650.19.
  • 21:20
    Robert Browne STATEMENT OF EU HEADS OF STATE OR GOVERNMENT : Brussels, 26 October 2011 "This quantitative capital target (9% tier 1) will have to be attained by 30 June 2012, based on plans agreed with national supervisors and coordinated by National supervisory authorities, under the auspices of the EBA, must ensure that banks’ plans to strengthen capital do not lead to excessive deleveraging, including maintaining the credit flow to the real economy"This is precisely what will happen, as has happened here in Ireland, banks will deleverage and shrink their balance sheets by, cutting credit to the real economy, in every conceivable way and by the time they have monitored what is happening tens of thousands of businesses across the EU will be stretched to their limits with large numbers of them failing. Credit Squeeze II is coming down the tracks even if they manage to bluff their way along. At the moment they are trying to fathom the unintended consequences which they have been very bad as we all know over the last three years.
  • 21:44
    The European Parliamentary Press Service has tweeted that a briefing is to be held at 10.30am tomorrow at which EU president Herman Van Rompuy and European Commission president Jose Manuel Barroso will be explaining the outcome of the euro summit.
  • 21:50
    EU leaders are still meeting but it is still unknown whether any solution will be reached tonight. We're finishing the liveblog now but will be reporting any breaking news on the summit as and when it happens. Stay tuned and thanks for your comments.