Euro Zone Crisis

Euro Zone Crisis

IT Fri, Dec 2
 

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  • 09:42
    Welcome to our ongoing live coverage of the euro zone debt crisis.
  • 09:42
    A bit of good news this morning. European stock markets rose and looked set for the biggest weekly rise since mid-2009 thanks to coordinated central bank action that cut the cost of money market funds
  • 09:43
    Investors meanwhile are hoping that a key European summit next week could finally yield a concrete solution to the euro debt crisis.
  • 09:46
    Italian and Spanish bond yields are down,which is also good news.

    However, Irish bond yields are broadly higher. Ten-year yields are 0.471 per cent higher at 8.2 per cent. Fiftteen year yields are up to 8.962 per cent. There's better news on the shortter term bonds, with one- two- and three-year bond yields all falling lower.
  • 09:49
    Angela Merkel has been warning this morning that restoring the euro will take years, but Germany is ready to defend it.
  • 09:51
    Addressing parliament this morning, she dismissed the possibility of the ECB adopting a Fed-style apporach and simply printing more money, saying "the European Central Bank has a different task from that of the U.S. Fed or the Bank of England".
  • 09:53
    And according to Greek prime minister Lucas Papademos, the euro zone must deal more effectively with its growing debt crisis.

    "It is important that the spread of the crisis in the euro zone is dealt with effectively, with greater progress in fiscal convergence and a bolstering of the economic governance in Europe," Mr Papademos said.
  • 10:33
    In Europe, stocks are rallying. The FTSE100 is up 1.7 per cent to 5,584.99.The DAX and the CAC are also up by similar amounts.


  • 10:33
    Even the Iseq is rallying, rising just under 1 per cent to 2734.43.
  • 11:23
    A bit of commentary from analysts:

    If the euro breaks up, Dutch bank ING says output int he region could fall by 9 per cent in the first year. The notional value of the shared currency could plunge to $0.85.

    If it fails, France and Belgium would devalue 15 per cent against the new Deutschmark; Ireland and Italy by 25 per cent; Portugal and Spain by 50 per cent; and Greece by 80 per cent.
  • 11:24
    Of course, ING's base case is that the euro will survive.
  • 12:13
    World stocks have risen more than half a per cent today, and look set for their biggest weekly gain in three years.

    USmarkets are also poised to open stronger after ending the previous session in slightly negative territory.
  • 12:42
    President Sarkozy, meanwhile, is meeting British prime minister David Cameron today in Paris to discuss the crisis.
  • 13:00
    There's been a lot of mutterings about what Dr Merkel and Mr Sarkozy's plans would mean for Ireland - particularly the corporation tax rate.
  • 13:01
    Tánaiste Eamon Gilmore has been speaking about it this morning. He says the Government won't be swayed on increasing corporation tax and a rise from the existing 12.5 per cent rate is not on the table.

    “The position of the Irish Government is absolutely clear. We are retaining our rate of corporation tax," he said. “It’s hugely important for us to provide that certainty for investors and potential investors that they know that the Irish Government is not going to increase corporation tax.”
  • 13:02
    Multinational businesses around Ireland - and their employees - are no doubt hoping he sticks to that line in the coming weeks and months.
  • 13:33
    More bad news for the Franco-German calls for treaty change: the president of the European Parliament Jerzy Buzek said the parliament is wary of treaty change as Europe's citizens are unlikely to warm to the idea in the near future and the project could be "dangerous".

    Mr Buzek said it was not a good moment for the European Union to strive for treaty change, above all because such developments would not help it out of the current crisis.
  • 14:05
    On the US market, stock futures rose after the non-farm payroll report showed accelerated job creation in November and the unemployment rate unexpectedly dropped.
  • 15:05
    We're wrapping up this live blog for the day, but you can follow the latest breaking news on our website