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UK manufacturing slides, as Italian bank rescue hopes build – business live UK manufacturing slides, as Italian bank rescue hopes build – business live
(35 minutes later)
11.14am GMT
11:14
JP Morgan and HSBC also reject Euribor findings
The European Commission have got a fight on their hands over today’s Euribor fines.
JP Morgan and HSBC have both announced that reject the EC’s conclusions that they breached antitrust laws, and will fight on to try to prove it.
A spokeswoman for JP Morgan (fined €337m today) says the bank could launch an appeal:
“We have cooperated fully with the European Commission throughout its five year investigation. We did not engage in any wrongdoing with respect to the EURIBOR benchmark.
We will continue to vigorously defend our position against these allegations, including through possible appeals to the European courts.”
HSBC (fined €33m) is also adamant that it didn’t take part in a cartel:
The European Commission’s decision relates to allegations of Euribor manipulation and related purported conduct during the course of one month in early 2007. We believe we did not participate in an anti-competitive cartel. We are reviewing the European Commission’s decision and considering our legal options.
Updated
at 11.15am GMT
10.56am GMT10.56am GMT
10:5610:56
Credit Agricole to appeal Euribor rulingCredit Agricole to appeal Euribor ruling
French bank Credit Agricole is refusing to accept that it breached antitrust rules!French bank Credit Agricole is refusing to accept that it breached antitrust rules!
In a short, sharp statement, it says:In a short, sharp statement, it says:
Crédit Agricole takes note of today’s decision of the European Commission in the Euribor case.Crédit Agricole takes note of today’s decision of the European Commission in the Euribor case.
Crédit Agricole firmly believes that it did not infringe competition law. Accordingly, it will appeal the Commission’s decision before the European courts.Crédit Agricole firmly believes that it did not infringe competition law. Accordingly, it will appeal the Commission’s decision before the European courts.
Payment of the fine will not affect the 2016 financial statements given the provisions set aside previously.Payment of the fine will not affect the 2016 financial statements given the provisions set aside previously.
10.16am GMT10.16am GMT
10:1610:16
Today’s fines mark the end of the euribor scandal, hopefully, Vestager continues.Today’s fines mark the end of the euribor scandal, hopefully, Vestager continues.
But....But....
The Commission will not hesitate to investigate and sanction any other cartel it may uncover in the future in the financial industry.The Commission will not hesitate to investigate and sanction any other cartel it may uncover in the future in the financial industry.
10.14am GMT10.14am GMT
10:1410:14
Commissioner Vestager is outlining the euribor ruling now.Commissioner Vestager is outlining the euribor ruling now.
You can watch it live here.You can watch it live here.
She says JP Morgan, HSBC and Credit Agricole all breached antitrust rules by conspiring to rig the euribor rate.She says JP Morgan, HSBC and Credit Agricole all breached antitrust rules by conspiring to rig the euribor rate.
The euribor market is means to provide protection from market volatility in euro-denominated securities, Vestager says. If this market is rigged, it will benefit only a few.The euribor market is means to provide protection from market volatility in euro-denominated securities, Vestager says. If this market is rigged, it will benefit only a few.
Traders used IM services and corporate chatrooms to exchange confidential information to distort the euribor rate to serve their own interests, she adds.Traders used IM services and corporate chatrooms to exchange confidential information to distort the euribor rate to serve their own interests, she adds.
Euribor was calculated from submissions from individual banks, which created the ability to rig it.Euribor was calculated from submissions from individual banks, which created the ability to rig it.
Vestager cites one example, from 19th March 2007, in which the cartel members decided they would benefit from a lower euribor rate. So, weeks earlier, they conspired to submit low numbers to the committee which calculated the daily figure.Vestager cites one example, from 19th March 2007, in which the cartel members decided they would benefit from a lower euribor rate. So, weeks earlier, they conspired to submit low numbers to the committee which calculated the daily figure.
(this will sound depressingly familiar to anyone who’s read about the Libor scandal).(this will sound depressingly familiar to anyone who’s read about the Libor scandal).
UpdatedUpdated
at 10.14am GMTat 10.14am GMT
10.07am GMT10.07am GMT
10:0710:07
Here’s the details of the euribor-rigging fines just announced by the EC.Here’s the details of the euribor-rigging fines just announced by the EC.
Margrethe Vestager, the EU’s antitrust commissioner, says:Margrethe Vestager, the EU’s antitrust commissioner, says:
“Banks have to respect EU competition rules just like any other company operating in the single market.”“Banks have to respect EU competition rules just like any other company operating in the single market.”
These fines come three years after four other banks were fined over Euribor rigging, Barclays, Deutsche Bank, RBS and Societe Generale.These fines come three years after four other banks were fined over Euribor rigging, Barclays, Deutsche Bank, RBS and Societe Generale.
UpdatedUpdated
at 10.08am GMTat 10.08am GMT
10.02am GMT10.02am GMT
10:0210:02
Crédit Agricole, HSBC and JP Morgan fined over Euribor scandalCrédit Agricole, HSBC and JP Morgan fined over Euribor scandal
Newsflash! The European commission has fined Cr´dit Agricole, HSBC and JP Morgan a combined total of €485m for their role in the Euribor fixing scandal.Newsflash! The European commission has fined Cr´dit Agricole, HSBC and JP Morgan a combined total of €485m for their role in the Euribor fixing scandal.
This is the case in which traders were accused of conspiring to rig the official rates at which banks would lend to each other in various currencies (euros, in this case)This is the case in which traders were accused of conspiring to rig the official rates at which banks would lend to each other in various currencies (euros, in this case)
More to follow....More to follow....
UpdatedUpdated
at 10.16am GMTat 10.16am GMT
9.49am GMT9.49am GMT
09:4909:49
City experts are pretty unimpressed by the slide in UK manufacturing in October:City experts are pretty unimpressed by the slide in UK manufacturing in October:
Ugh! October UK ind. production was worst month since September 2012, falling 1.3%m/m. -8.6%m/m plunge in mining & -0.9%m/m in manufacturing pic.twitter.com/nEawxnV39XUgh! October UK ind. production was worst month since September 2012, falling 1.3%m/m. -8.6%m/m plunge in mining & -0.9%m/m in manufacturing pic.twitter.com/nEawxnV39X
Despite better surveys, #UK manufacturing remained very weak in October despite weaker #GBP. May's #Brexit plan is to make it great again... pic.twitter.com/M22vIRpMPpDespite better surveys, #UK manufacturing remained very weak in October despite weaker #GBP. May's #Brexit plan is to make it great again... pic.twitter.com/M22vIRpMPp
9.44am GMT9.44am GMT
09:4409:44
That disappointing UK manufacturing report has hit the pound, sending it down 0.5% against the US dollar:That disappointing UK manufacturing report has hit the pound, sending it down 0.5% against the US dollar:
Pound falls to $1.26 after manufacturing output unexpectedly drops, by 0.9% https://t.co/5LG42Arn5o pic.twitter.com/3ng0Tr5F3sPound falls to $1.26 after manufacturing output unexpectedly drops, by 0.9% https://t.co/5LG42Arn5o pic.twitter.com/3ng0Tr5F3s
The Office for National Statistics reports that most areas of manufacturing struggled in October, led by pharmaceuticals, where output shrank by 3.6%.The Office for National Statistics reports that most areas of manufacturing struggled in October, led by pharmaceuticals, where output shrank by 3.6%.
9.40am GMT9.40am GMT
09:4009:40
This chart shows how Britain’s manufacturing sector weakened in October, after two months of gains:This chart shows how Britain’s manufacturing sector weakened in October, after two months of gains:
UK manufacturing output fell 0.9% in October 2016 vs September & was 0.4% lower than a year ago.#ukmanufacturinghttps://t.co/aqSS1d7cve pic.twitter.com/LejkS32iYsUK manufacturing output fell 0.9% in October 2016 vs September & was 0.4% lower than a year ago.#ukmanufacturinghttps://t.co/aqSS1d7cve pic.twitter.com/LejkS32iYs
Not so good. UK Manufacturing month on same month a year ago decreased by 0.4% in October 2016.Not so good. UK Manufacturing month on same month a year ago decreased by 0.4% in October 2016.
9.37am GMT9.37am GMT
09:3709:37
UK industrial production takes a tumble in OctoberUK industrial production takes a tumble in October
Breaking: Britain’s industrial sector has suffered its biggest fall in output sine 2012.Breaking: Britain’s industrial sector has suffered its biggest fall in output sine 2012.
UK industrial production shrank by 1.3% in October, dashing hopes of a 0.2% rise.UK industrial production shrank by 1.3% in October, dashing hopes of a 0.2% rise.
It’s partly due to the temporary shutdown of the Buzzard oil field in the North Sea.It’s partly due to the temporary shutdown of the Buzzard oil field in the North Sea.
But... manufacturing certainly had a poor month too. Output across manufacturing firms fell by 0.9% in October. That’s the weakest performance since February, and will raise fears that the economy is weakening.But... manufacturing certainly had a poor month too. Output across manufacturing firms fell by 0.9% in October. That’s the weakest performance since February, and will raise fears that the economy is weakening.
Economist Mark Astley says the figures are much weaker than expected.Economist Mark Astley says the figures are much weaker than expected.
UK #manufacturing & ind product much weaker than expected in Oct (-0.9%,-1.3% m/m; -0.4%,-1.1% y/y) #PMI giving false post #brexit picture?UK #manufacturing & ind product much weaker than expected in Oct (-0.9%,-1.3% m/m; -0.4%,-1.1% y/y) #PMI giving false post #brexit picture?
Investec’s Philip Shaw hopes that the underlying picture is better.Investec’s Philip Shaw hopes that the underlying picture is better.
UK manufacturing output down 0.9% in Oct. Note that surveys of the sector have been positive and so this is likely to be an erratic number.UK manufacturing output down 0.9% in Oct. Note that surveys of the sector have been positive and so this is likely to be an erratic number.
9.29am GMT
09:29
Every single Italian bank share has risen this morning, led by Monte dei Paschi which is currently 7.7% higher.
ITALY: Bank equities continue to rally today, big time. The Italian Treasury just denied that it "is preparing any requests to the ESM". pic.twitter.com/vuP4hjHdZP
9.23am GMT
09:23
ESM: Italy hasn't asked for help
Europe’s bailout fund has just said that it hasn’t received a request for help from Italy, and hasn’t had any discussions about a possible programme.
Asked about reports that Rome is planning a €15bn bailout request for its banks, a spokesman for the European Stability Mechanism says:
“There is no request and there are no discussions with theItalian authorities on an ESM loan.”
On press report about Italian loan request to #ESM: There is no request & there are no discussions with the Italian authorities on ESM loan
However...this denial doesn’t mean that Italy isn’t preparing a request for help from the ESM, of course....
Italy has denied "preparing a request' to ESM- but they have not ruled it out forever. It was last resort and still is. https://t.co/LGC86AyOY0
Updated
at 9.27am GMT
9.15am GMT
09:15
Looking away from Italy, the big news this morning is that drugs giant Pfizer has been hit with a record fine after the price charged to the NHS for an anti-epilepsy drug was hiked by up to 2,600%.
8.59am GMT
08:59
Boom! Germany’s DAX stock market has hit its highest level in a year, while France’s CAC is at an 11-month high.
8.47am GMT
08:47
Italian banking crisis: What the experts say
Optimism is rife in the City that a recapitalisation solution for troubled Italian bank Monte dei Paschi is in the pipeline, says Mike van Dulken of Accendo Markets
However, this could be via Italy applying for a €15bn loan from Europe’s ESM to help recapitalise several troubled banks and not just MPS which would avoid the issue of illegal state aid/bailout.
Mizuho strategist Antoine Bouvet says investors are hopeful that Rome will get a grip on the crisis:
“Despite the fact that the probability of early elections has risen, the market is focusing on the banking sector and the fact the government seems to be showing more urgency in dealing with that problem.”
However.... financial analyst Dan Davies (who actually owns some MPS shares, bold lad) isn’t convinced that a bailout will benefit shareholders.
Strong temptation to take my MPS off the table as I don't see how a state bail out leaves equity with anything
8.34am GMT
08:34
European stock markets are all rallying this morning, with banking stocks boosted by Italian bailout hopes.
The main indices are up around 1%, pushing the FTSE 100 up by almost 60 points to 6837.
La Stampa’s report that Italy may seek European help for its banks is cheering the City:
Italy's @LaStampa reporting Rome will seek #Spain-style bank bailout from #eurozone rescue fund. Big if true. #MPS https://t.co/Nw6eQG9zNN
Shares in Monte dei Paschi have surged 10% on reports Rome could seek an EU bank bailout https://t.co/M0Bc7lT69z pic.twitter.com/FiTwKxl4b9
In London, mining stocks are also gaining ground, with Rio Tinto and Antofagasta both up 4%.
8.18am GMT
08:18
Monte Dei Paschi shares leap on bailout hopes
Shares in Monte Dei Paschi have jumped by 9% at the start of trading in Milan, on hopes that Italy can pull off a rescue package.
Other Italian banks are rallying too, driving the whole sector up 3%.
Traders are reacting to La Stampa’s claim that Italy could seek a €15bn bailout (even though it’s just been denied)
They’re also comforted by Reuters’ overnight report that Italy could take a €2bn stake in Monte dei Paschi, in a bid to:
One source told Reuters that:
“It’s a de-facto nationalisation with a strong presence by the state that can attract other investors and allow the transaction to be completed.
8.07am GMT
08:07
Italian bonds strengthen
Italian government debt is rallying this morning, pushing the yield (interest rate) on its 10-year debt down to 1.91%, from 1.97%.
That has narrowed the gap between Italian and German borrowing costs - a key measure of stress in the eurozone.
#Italy 10y risk spread over #Germany continues to shrink following La Stampa report Italy to ask for €15bn ESM loan for Paschi, other Banks pic.twitter.com/VD1Euz1pTL
Updated
at 8.07am GMT
8.02am GMT
08:02
La Stampa: Italy to ask for €15bn ESM loan
Italy’s La Stampa newspaper is reporting that Rome is considering seeking a €15bn loan from European authorities, to recapitalise its banking sector.
According to the report, Italy would use the funds to shore up several banks, not just Monte dei Paschi.
In return, Rome would have to commit to tightening its 2017 budget (which might be tricky, given the political void at present).
BBG, citing La Stampa, says 15 billion eur ESM loan would allow for recapitalization of Paschi, Pop Vincenza, Veneto Banca, Carige.
It’s an intriguing idea, with one problem....it’s just been denied by Italy’s Treasury department.
*ITALIAN TREASURY DENIES PREPARING REQUESTS TO ESM ON BANKS - BBG
But how could it happen?
These funds would come from the European Stability Mechanism (ESM), which is Europe’s bailout fund. Spain took a similar loan a few years ago, which helped it avoid falling into a financial crisis.
The attraction for Italy would that such a loan would come with fewer strings attached than a full-scale bailout. But there would still be some conditions, and monitoring of its banks by Brussels.
If Italy turns to ESM, here's the relevant toolkit for (indirect) bank recapitalisation. https://t.co/lcGnRHZz37 pic.twitter.com/K2gWnBsGVr
Updated
at 8.09am GMT
7.42am GMT
07:42
The agenda: Italian banking rescue, euribor fines?
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Three days on from Italy’s constitutional referendum, the future of the country’s weaker banks still hangs in the balance.
Monte de Paschi di Siena (MPS), the oldest and most troubled of the Italian banks, is making a final push to persuade investors to back its €5bn cash call.
But prime minister Matteo Renzi’s resignation may force Monte dei Paschi into seeking some form of help from the state, as investors have been spooked by the uncertainty gripping the Italian political system.
Reuters reported last night that the Italian government could take a €2bn controlling stake in MPS, which would lift the government’s stake up to 40%. That could also provide compensation for the small retail investors who hold some of its bonds.
And there is still talk that a public rescue plan could be cobbled together by the weekend, possibly even with some fund from Europe? All may become clearer today... #NoPromises
Also coming up today:
The European Commission could hit HSBC, JPMorgan and Crédit Agricole with multimillion-euro fines later today for rigging the Euribor interest rate benchmark.
Australia has sent a shiver through the global economy by reporting that its economy shrank by 0.5% in the last quarter; only the fourth such decline in 25 years.
Here’s how the story unfolded:
On the economic front, we get:
Updated
at 7.49am GMT