Euro Zone Crisis

Euro Zone Crisis

IT Mon, Jan 16

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  • 08:09
    Good morning and welcome to the live blog on the euro zone crisis.

    With S&P opting to downgrade the credit ratings of nine euro zone countries - including France - on Friday, this morning marks the first opportunity for investors to give their reaction to the move.

    We'll also be keeping a close eye on Greece today following the breakdown of talks between the government and private-sector lenders on Friday, making it more likely that Athens will suffer a full-scale default on its debt.

    Please stay with us for all the latest news and analysis from Europe and feel free to send on your comments.
  • 08:16
    S&P's ratings downgrade may have been expected but it has still upset euro zone leaders.

    German chancellor Angela Merkel said at the weekend the downgrade of France and Austria made clear the need for a "reesolute, not watered-down" fiscal compact.

    She also described the downgrade as a reminder to "pick up the pace" on the "long road" of reform Europe has ahead of it.

    Here's our German correspondent Derek Scally's report on Ms Merkel's comments from today's 'Irish Times'
  • 08:20
    French president Nicolas Sarkozy has come under attack over his handling of the economy after the loss of the country's triple-A credit rating. While Mr Sarkozy has directly addressed the cut, French prime minister François Fillon played down its impact yesterday and tried to steer the debate towards European-level moves to improve governance.

    Here's our French correspondent Ruadhán Mac Cormaic's report on reaction from Paris
  • 08:23
    A short time ago, Japan's Nikkei average fell to a one-month closing low today on the euro zone ratings downgrades.

    The Nikkei ended down 1.4 per cent to 8,378.36, back below its 25-day moving average near 8,467 after closing above the technical level on Friday. The broader Topix fell 1.3 per cent to 725.24.
  • 08:49
    European stocks pared early losses and turned flat in morning trade as gains in defensive shares offset a drop in banking stocks following Friday's mass downgrade.

    At 08.45am, the FTSEurofirst 300 index of top European shares was down 0.04 per cent at 1,107.45 points after losing as much as 0.5 per cent in early trade.
  • 08:58
    Irish gross domestic product (GDP) will grow by just 0.4 per cent this year and 1.4 per cent in 2013, according to Davy.

    The company has sharply cut its previous forecast for GDP growth of 1.7 per cent in 2012 and 1.6 per cent in 2013.

    It has also cuts its gross national product (GNP) - a narrower measure of economic activity which excludes multinational firms. The company predicts GNP will contract by 0.4 per cent in 2012 compared to its previous forecast of 1 per cent.

    Davy said it expected export growth to slow from 4.5 per cent in 2011 to 2.8 per cent this year, despite gains in competitiveness. It sees employment falling by 0.4 per cent in 2012, and picking up gradually in 2013.

    The organisation said it does not expect Ireland to hit the targets set out for the budget deficit in 2012 and 2013.

  • 09:16
    European stocks have fallen as investors react to ratings agency S&P's mass downgrade of euro zone countries on Friday.

    At 09.02 am, the FTSEurofirst 300 index of top European shares was down 0.5 per cent at 1,013.17 points.

    Around Europe, the FTSE 100 index was down 0.4 per cent, Germany's DAX index was down 0.6 per cent, and France's CAC 40 was 1 per cent lower. The Iseq index of leading shares is down 0.7 per cent at 2929.04.
  • 09:21
    Global leaders and businessmen have urged Europe today to take fresh steps to resolve its deepening debt crisis, with a top executive of the IMF warning the continent will see a "downward spiral of collapsing confidence" if no further action is taken.

    "Without ... action, Europe will be swept into a downward spiral of collapsing confidence, stagnant growth and fewer jobs," David Lipton, first deputy managing director at the International Monetary Fund, told the Fifth Asian Financial Forum in Hong Kong today.
  • 09:26
    The euro held near a 17-month low against the dollar and hit a 11-year low versus the yen today.

    The euro was last down 0.1 per cent against the dollar at $1.2671 and was vulnerable to a test of Friday's 17-month low of $1.2624, with stop loss orders said to be at $1.2600.

    Analysts and traders said a lack of technical support meant a break below $1.25 could quickly see the euro falling towards $1.20 and the 2010 low around $1.1875.
  • 09:35
    All the focus may be on S&P's decision to downgrade nine euro zone countries' credit ratings on Friday but uncertainty over fixing Greece's debt crisis is more of a threat to stability at the moment, according to British chancellor George Osborne.

    Mr Osborne said the euro zone needs to "show convincingly that it can stand behind its currency."

    "We haven't actually seen much evidence of the pooled resources needed by the euro to actually provide confidence to the market that they will stand behind their own currency, he said during an interview broadcast on BBC radio.
  • 09:51
    George Osborne may be concerned about the situation in Greece but Greek PM Lucas Papademos seems pretty relaxed about the collapse of talks on Friday last. He said this morning he was sure a deal on a crucial debt swap plan can be reached quickly.

    "There is a little pause in these discussions. But I am confident that they will continue and we will reach an agreement that is mutually acceptable in time," Mr Papademos said in an interview with CNBC.
  • 10:10
    European Union Internal Market and Services Commissioner Michel Barnier has said the euro is here to stay as a global currency.

    "The euro is here to stay. In the last 10 years the euro has proven itself as a true world currency. And despite the difficulties, it remains strong. The real crisis the euro zone faces right now is a crisis of confidence. Our political unity and our determination and our ability to rectify what is wrong are being tested," he said.

    Mr Barnier, who was speaking at the Asian Financial Forum in Hong Kong this morning also repeated his surprise at the decision of ratings agency S&P to downgrade euro zone countries on Friday and called for greater transparency in how such agencies reach their decisions.
  • 10:16
    More from the CNBC interview with Greece's prime minister Luas Papademos. Not only is he confident about reaching a deal with private-sector lenders, but he also says the country will not be forced out of the euro.

    Mr Papademos said quitting the euro zone "is really not an option."
  • 10:23
    European stocks have pared early losses and inched higher in morning trade as gains in defensive shares such as pharmaceuticals offset a drop in banking stocks following S&aP's mass credit rating downgrade of euro zone countries.

    The FTSEurofirst 300 index of top European shares was up 0.1 percent at 1,018.63 points after losing as much as 0.5 per cent in early trade.

    Around Europe, UK's FTSE 100 index was down 0.2 per cent, Germany's DAX index was up 0.2 per cent, and France's CAC 40 down 0.2 per cent.

    The euro zone's blue chip Euro STOXX 50 index, a barometer of investor sentiment towards the region, was flat, at 2,336.80 points.

    The MSCI world equity index also recovered from losses seen in Asian trade to be just 0.2 per cent lower.
  • 10:54
    Fifty-five percent of Italians have lost confidence in the euro and nearly a third think it would be better to return to the lira, according to a new opinion poll.

    The survey by pollsters ISPO, published in the Corriere della Sera daily, said 65 per cent of those polled thought the introduction of the euro had been more damaging than beneficial for the Italian economy.

    Confidence in the European Union stood at 51 percent, the lowest level in many years, the newspaper said.
  • 11:03
    Moody's has this morning maintained France’s AAA credit rating and said it would review the situation by the end of the first quarter
  • 11:20
    ECB data released today show overnight deposits have reached a new high of €493 billion, up from the €490 billion they had risen to on Friday.
  • 11:39
    European Union president Herman Van Rompuy has said "real progress" is being made to reshape the euro zone.

    Speaking at a joint news conference with Italiam prime minister Mario Monti in Rome this morning, Mr Van Rompuy said EU leaders will sign an accord on a fiscal compact in early March.
  • 12:21
    European stocks have moved slightly higher during a choppy session today, with weakness in banks after a mass credit downgrade of euro zone countries offset by a rise in defensives, such as pharmaceuticals.

    The STOXX Europe 600 Euro Zone Banking Index has fallen 0.9 per cent.

    The FTSEurofirst 300 index of top European shares is up 0.1 per cent at 1,019.07 points after losing as much as 0.5 per cent in early trade. The index remains near the five-month high it hit last week but has failed to break above key technical levels such as its 200-day moving average. The CAC-40 in Paris is flat and Germany’s Dax slightly higher, while the FTSE 100 Index is 2 points lower at 5634.7.

    In Dublin, the Iseq index of leading shares is down 0.5 per cent to 2927.94.
  • 12:26
    News just in from our finance correspondent Simon Carswell (@sicarswell). He has just tweeted from the High Court that businessman Sean Quinn has been declared bankrupt after he didn't object to a bankruptcy application by IBRC, formerly Anglo Irish Bank. We'll have more on this shortly...
  • 12:45
    Here's more on the Sean Quinn bankruptcy
  • 12:48
    Talking of bankruptcies...more than four people have been declared every day in Northern Ireland since April, NI Minister for Enterprise, Trade and Investment Arlene Foster said today.

    During the financial year from April to January 10th there have been 1,164 bankruptcies. That compares to 906 in 2007/8.
  • 12:51
    The Government and its troika bailout partners are discussing the timing of this year's round of bank capital stress tests, according to Bloomberg.

    "We are currently in the process of agreeing the broad timing and parameters of a future solvency stress test with the troika,"Peadar Hayes, a central bank spokesman told Bloomberg.

    While the Central Bank has previously said it would carry out its annual bank tests at the same time as the European Banking Authority, a European Union official said last month that the authority's 2012 tests would be delayed until after June.
  • 13:25
    'The Guardian' is reporting that an Italian-German-French summit, which was scheduled to take place this Friday, has been postposed until the end of February due to an 'internal Fench political issue' that prevents President Sarkozy from attending...No one else has confirmed this as yet though
  • 13:45
    Portugal's black economy expanded to a quarter of GDP in 2010, denying the debt-ridden country much-needed tax revenues, and probably grew further last year after tax rises, according to a new study.

    The report, prepared by Porto University's OBEGEF Economy and Fraud Monitoring Observatory, showed that the shadow economy expanded by 2.5 per cent in 2010, reaching 24.8 per cent of GDP.

    That translates into more than €8 billion in lost revenue for the state at an average tax rate of 20 per cent at 2010 prices.

    The Revenue Commissioners estimate the shadow economy in Ireland is worth as much as €21 billion and it recently announced plans to target enforcement activities on sectors which have the greatest potential to operate using cash.
  • 14:07
    It's not just euro zone countries that are hitting the IMF for loans... Egypt has requested a $3.2 billion loan and an agreement is expected to be reached "within weeks," minister for planning and international cooperation Fayza Aboulnag, told reporters in Cairo today.
  • 14:09
    French borrowing costs have fallen at the nation's first bill sale since Standard and Poor's stripped the nation of its top credit rating.

    France sold €1.895 billion euros of 51-week notes at a yield of 0.406 per cent, down from 0.454 per cent on January 9th. The Treasury also sold €4.503 billion of three-month notes and €2.192 billion six month bills. Yields fell on both.
  • 14:53
    The ECB has confirmed that it bought €3.77 billion of euro area bonds last week, compared to €1.1 billion the previous week. Total now running to €217 billion.
  • 15:23
    European shares have rallied somewhat since this morning. The FTSE 100 index in London is up 0.26 per cent, Germany's DAX index is up 0.97 per cent, and France's CAC 40 is 0.51 per cent higher. The Iseq index of leading shares is trading up 0.83 per cent at 2932.59.
  • 15:52
    The meeting of the French, German and Italian presidents scheduled for Rome on Janurary 20th has been postponed. French President Nicolas Sarkozy said he'll talk to Italian Prime Minister Mario Monti by telephone tonight, and said the meeting Merkel was postponed because they have all met in recent weeks. "What would be the point of a meeting that was already being termed a summit when we are always being reproached for organising too many summits," Sarkozy said at a press conference in Madrid.
  • 16:10
    Spanish Prime Minister Mariano Rajoy said his government has already increased taxes "enough." "I think it's perfectly possible to reduce the public deficit without raising taxes any further in the coming months," Rajoy said in Madrid today. Voters are "right" to oppose the tax increases, which were announced on December 30th, a month after Rajoy won the election following campaign pledges not to raise taxes, he said
  • 17:28
    European shares finished up today but trading was light, as investors shrugged aside Standard & Poor's downgrade of nine euro zone countries and fresh worries about an unruly default in Greece. The best performing sector was carmakers after some upbeat broker comment buoyed the sector. The FTSEurofirst 300 index of top European shares provisionally closed up 0.8 percent at 1,025.64 points
  • 17:30
    British stocks closed up today prompting speculation speculation that investors have already accounted for concerns raised by Standard and Poor's when it cut the credit ratings of nine euro- area nations last week. Publisher Pearson, which owns owner of the Financial Times, was up 2.7 per cent after UBS advised buying the shares. Carnival plummeted the most on record in London trading after saying that the grounding of its Costa Concordia cruise liner off Italy's Tuscan coast will cost as much as $95 million. The FTSE 100 Index rose 20.8, or 0.4 percent, to 5,657.44 at the close in London.
  • 17:50
    The Iseq index closed up 0.2 per cent after a relatively flat finish for markets across Europe. Equities swung into positive territory in the mid-morning after investors shook off the much-anticipated news of Standard and Poor’s downgrading of the sovereign debt of nine euro-zone countries after the close of trading on Friday.

    Cement-maker CRH climbed 0.6 per cent to €15.08, despite news of an impairment taken by its building materials peer Holcim, while paper and packaging group Smurfit Kappa advanced 1 per cent to €5.11, albeit on tiny volume.

    A trading statement from industrial holdings group DCC noted that a “prolonged period exceptionally mild weather” in the early part of the winter had weakened demand in its energy business, the largest division in the company. Combined with a difficult economic background and high oil prices, this is likely to continue to impact on both volumes and margins for energy products in the current quarter, the company said. The stock fell 1.4 per cent to €18.15.

    Other fallers included food group Greencore, which declined 1.8 per cent to 61 cent, while Kerry fell back 1.6 per cent to €27.53. Bookmaker Paddy Power also went into reverse, closing down 1.4 per cent at €42.10.
  • 17:54
    With the US markets closed for Martin Luther King Day it's all quiet out there, so we're closing the live blog for today