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Eurozone crisis live: Greek bankruptcy fears loom over EU summit Eurozone crisis live: Cameron demands action on growth as EU summit begins
(40 minutes later)
2.36pm: EU leaders are now gathered together in Brussels. Nick Watt, our political correspondent, is at the scene and reports that David Cameron was joking with Angela Merkel amd José Manuel Barroso. He also gave Nicolas a (quick) hug: 2.42pm: Speaking of Angela Merkel.... the German PM appears to have pulled u-turn on a controversial proposal that the EU should embed a commissioner to oversee Greek government spending.
The idea of a debt tzar with veto powers over the Greek budget emerged over the weekend, prompting swift anger in Greece. It was suggested by Germany, but Merkel has conceded this afternoon that this invasion of national sovereignty won't fly.
Merkel told reporters in Brussels that:
I believe that we are having a discussion that we shouldn't be having.

She added that Europe must help Greece to bring in the austerity measures and economic reforms it has promised, saying:
All that will only work if Greece and all other states discuss this together.
2.36pm: EU leaders are now gathered together in Brussels. Nick Watt, our political correspondent, is at the scene and reports that David Cameron was joking with Angela Merkel amd José Manuel Barroso. Cameron also gave Nicolas Sarkozy a (quick) hug:
PM warm embrace of Sarkozy at EU summit. Very brief. Sarkozy keen to move onPM warm embrace of Sarkozy at EU summit. Very brief. Sarkozy keen to move on
— Nicholas Watt (@nicholaswatt) January 30, 2012— Nicholas Watt (@nicholaswatt) January 30, 2012
2.21pm: Draft versions of the fiscal compact have been knocking around Brussels in recent days.2.21pm: Draft versions of the fiscal compact have been knocking around Brussels in recent days.
Open Europe, the think tank, have taken a good look at the most recent version and identified a few interesting pointers.Open Europe, the think tank, have taken a good look at the most recent version and identified a few interesting pointers.
1) The "balanced budget rule" appears to have been further watered down:1) The "balanced budget rule" appears to have been further watered down:
The wording "with the annual structural deficit not exceeding 0.5% of the GDP at market prices" has been replaced by "with a lower limit of a structural deficit of 0.5% of the GDP at market prices.""The wording "with the annual structural deficit not exceeding 0.5% of the GDP at market prices" has been replaced by "with a lower limit of a structural deficit of 0.5% of the GDP at market prices.""
We wonder how the markets will react: There's quite a substantial difference between imposing a maximum cap and a blander lower limit.We wonder how the markets will react: There's quite a substantial difference between imposing a maximum cap and a blander lower limit.
2) Non-euro countries will no longer need to implement at least part of the budgetary rules set out for eurozone countries in order to qualify for a place by the table at future summits of eurozone leaders. However, invites will still be allowed only for meetings which specifically focus on the implementation of the 'fiscal treaty'.2) Non-euro countries will no longer need to implement at least part of the budgetary rules set out for eurozone countries in order to qualify for a place by the table at future summits of eurozone leaders. However, invites will still be allowed only for meetings which specifically focus on the implementation of the 'fiscal treaty'.
That, Open Europe says, should be enough to get Sweden onside. Perhaps not Poland, though.That, Open Europe says, should be enough to get Sweden onside. Perhaps not Poland, though.
3) Open Europe is also interested by a reference in the fiscal treaty to the European Court of Justice (ECJ) being able to impose fines of 0.1% of GDP on countries that fail to incorporate balanced budget rules into their national laws. It commented:3) Open Europe is also interested by a reference in the fiscal treaty to the European Court of Justice (ECJ) being able to impose fines of 0.1% of GDP on countries that fail to incorporate balanced budget rules into their national laws. It commented:

This is a power that the ECJ seems to have under Article 260 of the Lisbon Treaty. The power to impose fines in such circumstances is therefore not a new power (and the ECJ still does not have the power to punish countries for missing their deficit targets). However, questions still remain over the eligibility of the ECJ to rule on whether the balanced budget rules have been correctly incorporated in the first place.
This is a power that the ECJ seems to have under Article 260 of the Lisbon Treaty. The power to impose fines in such circumstances is therefore not a new power (and the ECJ still does not have the power to punish countries for missing their deficit targets). However, questions still remain over the eligibility of the ECJ to rule on whether the balanced budget rules have been correctly incorporated in the first place.
You can see the latest draft version of the Treaty on Stability, co-ordination and governance here (pdf), while a draft version of the statement that will be issued after the summit is here (.pdf). You can see the latest draft version of the Treaty on Stability, Co-ordination and Governance here (.pdf), while a draft version of the statement that will be issued after the summit is here (.pdf).
1.51pm: Quick update on Portugal -- its sovereign debt has continued to fall in value today, pushing up the yield on its 10-year bonds to a new high of 17.2%.1.51pm: Quick update on Portugal -- its sovereign debt has continued to fall in value today, pushing up the yield on its 10-year bonds to a new high of 17.2%.
As Peterbracken points out in the reader comments below, price changes in the secondary bond market don't have an immediate impact on Portugal's borrowing costs - but do reflect how much it would have to pay if it sold new debt.As Peterbracken points out in the reader comments below, price changes in the secondary bond market don't have an immediate impact on Portugal's borrowing costs - but do reflect how much it would have to pay if it sold new debt.
Another worrying development today -- the cost of insuring Portuguese debt against default has hit a new record high. As the FT put it:Another worrying development today -- the cost of insuring Portuguese debt against default has hit a new record high. As the FT put it:
the market is now pricing in a 71% chance that the country will default over the next five years.the market is now pricing in a 71% chance that the country will default over the next five years.
1.38pm: Taoiseach Enda Kenny has also arrived in Brussels, insisting that Ireland does not fear a referendum on the EU treaty on fiscal reform.1.38pm: Taoiseach Enda Kenny has also arrived in Brussels, insisting that Ireland does not fear a referendum on the EU treaty on fiscal reform.
Speaking as he arrived at today's summit of EU leaders, Kenny said the Fine Gael-Labour coalition has "no fear, concern or anxiety" about yet another
vote on an EU treaty (see 10.43am for background info)		Speaking as he arrived at today's summit of EU leaders, Kenny said the Fine Gael-Labour coalition has "no fear, concern or anxiety" about yet another
vote on an EU treaty (see 10.43am for background info)
Our Ireland correspondent, Henry McDonald, reports:Our Ireland correspondent, Henry McDonald, reports:
Under the Irish Constitution the government in Dublin may be obliged to hold a plebescite on the merits of the EU treaty on tighter budgetary discipline because it has implications for the Republic's sovereignty. The entire EU project was thrown into chaos when the Irish initially rejected the Lisbon Treaty but then were forced to endorse it in a second referendum.Under the Irish Constitution the government in Dublin may be obliged to hold a plebescite on the merits of the EU treaty on tighter budgetary discipline because it has implications for the Republic's sovereignty. The entire EU project was thrown into chaos when the Irish initially rejected the Lisbon Treaty but then were forced to endorse it in a second referendum.
The Taoseach said he hoped that the text on the agreement could be finalised by EU leaders today.The Taoseach said he hoped that the text on the agreement could be finalised by EU leaders today.
Once that happened, Kenny said it would be sent to the Republic's Attorney General who would decide if the agreement was in compliance with the Irish Constitution.Once that happened, Kenny said it would be sent to the Republic's Attorney General who would decide if the agreement was in compliance with the Irish Constitution.
Kenny will use the summit to outline his government's plans to boost job creation in the small and medium-sized business sector (a goal also set by David Cameron as he arrived in Brussels)Kenny will use the summit to outline his government's plans to boost job creation in the small and medium-sized business sector (a goal also set by David Cameron as he arrived in Brussels)
He said he hoped the jobs creation issue would be kept central to the agenda of EU summits from here-on because "this is what European politics is about".He said he hoped the jobs creation issue would be kept central to the agenda of EU summits from here-on because "this is what European politics is about".
Kenny is expected to highlight the requirement that the tax payer-backed Irish banks meet targets of lending €3.5bn each to small and medium-sized businesses, as well as reductions in PRSI (national insurance) and a number of further soon to be announced jobs initiatives.Kenny is expected to highlight the requirement that the tax payer-backed Irish banks meet targets of lending €3.5bn each to small and medium-sized businesses, as well as reductions in PRSI (national insurance) and a number of further soon to be announced jobs initiatives.
1.32pm: David Cameron just arrived at the summit.1.32pm: David Cameron just arrived at the summit.
The UK prime minister told the assembled media that today's meeting needs to focus on growth:The UK prime minister told the assembled media that today's meeting needs to focus on growth:

That means completing the single market, it means signing trade deals with the fastest growing parts of the world and it means a serious effort at deregulation, particularly for small businesses, so they can create the jobs and the growth that we need.
That means completing the single market, it means signing trade deals with the fastest growing parts of the world and it means a serious effort at deregulation, particularly for small businesses, so they can create the jobs and the growth that we need.
That's the agenda I am going to be pushing and I hope to find a lot of support."That's the agenda I am going to be pushing and I hope to find a lot of support."
The last time Cameron met his fellow EU leaders, support was in short supply - leading him to deploy his veto.The last time Cameron met his fellow EU leaders, support was in short supply - leading him to deploy his veto.
It now appears that Britain has dropped its opposition to the European Courts of Justice being used to enforce a eurozone fiscal pact, with foreign secretary William Hague saying the threat had been shelved.It now appears that Britain has dropped its opposition to the European Courts of Justice being used to enforce a eurozone fiscal pact, with foreign secretary William Hague saying the threat had been shelved.
You can still watch the EU leaders arriving at this web site.You can still watch the EU leaders arriving at this web site.
12.43pm: EU leaders have started to arrive in Brussels for this afternoon's summit.12.43pm: EU leaders have started to arrive in Brussels for this afternoon's summit.
Helpfully, the European Council is running a live video-stream of proceedings as a series of chauffeur-driven limos arrive. Some leaders are likely to make 'doorstep statements' to the media (who are penned into two enclosures close to the red carpet), although others are choosing to sashay inside without a word.Helpfully, the European Council is running a live video-stream of proceedings as a series of chauffeur-driven limos arrive. Some leaders are likely to make 'doorstep statements' to the media (who are penned into two enclosures close to the red carpet), although others are choosing to sashay inside without a word.
We'll keep an eye on the feed.We'll keep an eye on the feed.
12.27pm: Spanish prime minister Mariano Rajoy has admited that Spain will miss its growth targets this year.12.27pm: Spanish prime minister Mariano Rajoy has admited that Spain will miss its growth targets this year.
Speaking after data showed Spain's economy shrank by 0.3% in the last three months (see 8.13am) , Rajoy said there was no chance of Spain growing by 2.3% in 2012, as planned.Speaking after data showed Spain's economy shrank by 0.3% in the last three months (see 8.13am) , Rajoy said there was no chance of Spain growing by 2.3% in 2012, as planned.
Rajoy told reporters in Brussels, following a meeting with EC president José Manuel Barroso, that:Rajoy told reporters in Brussels, following a meeting with EC president José Manuel Barroso, that:
We're going to present a new macroeconomic framework, but the current one says that we'll have GDP growth of 2.3% this year, these are the last macroeconomic projections in Spain, but it is evident that it won't end up like this.We're going to present a new macroeconomic framework, but the current one says that we'll have GDP growth of 2.3% this year, these are the last macroeconomic projections in Spain, but it is evident that it won't end up like this.
11.49am: There's a great line running on the Wall Street Journal this morning – apparently the French government is reluctant for countries to be penalised if they breach the maximum debt/GDP ratio allowed under the new fiscal compact.11.49am: There's a great line running on the Wall Street Journal this morning – apparently the French government is reluctant for countries to be penalised if they breach the maximum debt/GDP ratio allowed under the new fiscal compact.
From the WSJ:From the WSJ:
EU leaders will discuss on Monday two final unresolved questions on the fiscal compact.EU leaders will discuss on Monday two final unresolved questions on the fiscal compact.
The first is whether non-eurozone countries that have signed the pact will be allowed to participate in meetings where euro-area issues are discussed.The first is whether non-eurozone countries that have signed the pact will be allowed to participate in meetings where euro-area issues are discussed.
Another issue is whether sanctions will be imposed when countries fail to meet the pact's requirements on debt-to-gross domestic product ratios.Another issue is whether sanctions will be imposed when countries fail to meet the pact's requirements on debt-to-gross domestic product ratios.
"The Italians and the French are not keen on the debt rules being up for sanctions," an EU official told Dow Jones Newswires on Monday."The Italians and the French are not keen on the debt rules being up for sanctions," an EU official told Dow Jones Newswires on Monday.
11.37am: Tom Rayner of Sky News reports that demonstrators are gathered in Brussels, holding placards calling for the introduction of eurobonds.11.37am: Tom Rayner of Sky News reports that demonstrators are gathered in Brussels, holding placards calling for the introduction of eurobonds.
Demonstrators calling for introduction of Eurobonds gather outside EU leaders minister in Brussels twitter.com/RaynerSkyNews/…Demonstrators calling for introduction of Eurobonds gather outside EU leaders minister in Brussels twitter.com/RaynerSkyNews/…
— Tom Rayner (@RaynerSkyNews) January 30, 2012— Tom Rayner (@RaynerSkyNews) January 30, 2012
11.20am: The tortuous negotiations between the Greek government and debt auditors representing the EU and IMF are continuing in Athens.11.20am: The tortuous negotiations between the Greek government and debt auditors representing the EU and IMF are continuing in Athens.
The outcome of the talks will form the basis of the new terms and conditions of the second bailout package for Greece.The outcome of the talks will form the basis of the new terms and conditions of the second bailout package for Greece.
As Helena Smith, our Athens correspondent, reported last night, the talks have been stormy – with discussions breaking down last week over the request of creditors for a reduction in the €750 minimum wage and abolishment of a "13th and 14th" month salary bonus granted to workers in the private sector.As Helena Smith, our Athens correspondent, reported last night, the talks have been stormy – with discussions breaking down last week over the request of creditors for a reduction in the €750 minimum wage and abolishment of a "13th and 14th" month salary bonus granted to workers in the private sector.
EU and IMF officials say both have to be scrapped to make the country's flagging economy more competitive. But Greek officials are sticking to their guns: they are adamant that the measures will exacerbate Greece's ongoing recession – the 6% drop in GDP is the worst in Europe – and, in so doing, outweigh the beneficial effects of boosting notoriously low competitive levels.EU and IMF officials say both have to be scrapped to make the country's flagging economy more competitive. But Greek officials are sticking to their guns: they are adamant that the measures will exacerbate Greece's ongoing recession – the 6% drop in GDP is the worst in Europe – and, in so doing, outweigh the beneficial effects of boosting notoriously low competitive levels.
Instead, the Greek labour minister George Koutroumanis has come out in support of a trade union counterproposal for a three-year wage freeze – this, of course, on top of relentless taxes and other austerity measures enforced over the past two years.Instead, the Greek labour minister George Koutroumanis has come out in support of a trade union counterproposal for a three-year wage freeze – this, of course, on top of relentless taxes and other austerity measures enforced over the past two years.
Helena reports that:Helena reports that:
Koutroumanis is expected to make the point today when he meets mission chiefs from Greece's troika of creditors – the EU, ECB and IMF – at what insiders say will almost certainly be another stormy session. "Such measures are totally counter-productive and will never be endorsed," said Louka Katseli, an erstwhile economy minister in the former socialist government, highlighting the mood among austerity-weary MPs.Koutroumanis is expected to make the point today when he meets mission chiefs from Greece's troika of creditors – the EU, ECB and IMF – at what insiders say will almost certainly be another stormy session. "Such measures are totally counter-productive and will never be endorsed," said Louka Katseli, an erstwhile economy minister in the former socialist government, highlighting the mood among austerity-weary MPs.
Prime minister Lucas Papademos, appears to agree. Perhaps because he is also aware that the policies will never pass a Greek parliament gearing up for elections in the spring, aides say he is prepared to make the case at today's summit where Greece is meant to be off the agenda but will almost certainly be discussed.Prime minister Lucas Papademos, appears to agree. Perhaps because he is also aware that the policies will never pass a Greek parliament gearing up for elections in the spring, aides say he is prepared to make the case at today's summit where Greece is meant to be off the agenda but will almost certainly be discussed.
Papademos's senior economic adviser, George Pagoulatos, told Helena that:Papademos's senior economic adviser, George Pagoulatos, told Helena that:
Despite international criticism, there is a strong commitment to reform.Despite international criticism, there is a strong commitment to reform.
But it must be said that the Greek government also disagrees with some of the policies being requested by the troika and, if Greece is discussed, will argue its case.But it must be said that the Greek government also disagrees with some of the policies being requested by the troika and, if Greece is discussed, will argue its case.
But what happens if the troika sets the wage reductions as a precondition of further aid? With Athens teetering on the brink of bankruptcy, and facing a €14.5bn bond repayment in barely two months' time, no side can afford a showdown – not least Greece.But what happens if the troika sets the wage reductions as a precondition of further aid? With Athens teetering on the brink of bankruptcy, and facing a €14.5bn bond repayment in barely two months' time, no side can afford a showdown – not least Greece.
10.43am: The prospect of Ireland being forced out of the eurozone by the new fiscal treaty has reared up this morning.10.43am: The prospect of Ireland being forced out of the eurozone by the new fiscal treaty has reared up this morning.
European affairs minister Lucinda Creighton told state radio that Ireland's legal establishment is still considering whether to hold a referendum on the new treaty. The attorney general is expected to give his verdict in a couple of weeks.European affairs minister Lucinda Creighton told state radio that Ireland's legal establishment is still considering whether to hold a referendum on the new treaty. The attorney general is expected to give his verdict in a couple of weeks.
Creighton warned that if a referendum were held, and the Irish people opposed the new rules, Ireland would probably have to quit the euro. She explained that:Creighton warned that if a referendum were held, and the Irish people opposed the new rules, Ireland would probably have to quit the euro. She explained that:
I think it would make it almost impossible for us to continue as part of the currency union because being part of a currency union means you have to abide by the rules.I think it would make it almost impossible for us to continue as part of the currency union because being part of a currency union means you have to abide by the rules.
The Attorney general may not get the final word. Sein Féin have vowed to take legal action to force a referendum on the issue, if required.The Attorney general may not get the final word. Sein Féin have vowed to take legal action to force a referendum on the issue, if required.
A public opinion poll published last weekend showed that 72% of people believe that a referendum is necessary. It's not at all clear that a majority of people would support the new fiscal compact.A public opinion poll published last weekend showed that 72% of people believe that a referendum is necessary. It's not at all clear that a majority of people would support the new fiscal compact.
10.21am: The results of Italy's bond auction are in – and at first glance it has gone pretty well.10.21am: The results of Italy's bond auction are in – and at first glance it has gone pretty well.
Italy sold €5.57bn worth of five and ten-year bonds (having aimed to sell a maximum of €6bn). The interest rates demanded by investors fell significantly, to the lowest levels since October.Italy sold €5.57bn worth of five and ten-year bonds (having aimed to sell a maximum of €6bn). The interest rates demanded by investors fell significantly, to the lowest levels since October.
Yields on the 10-year bonds dropped to 6.08%, down from 6.98% at the previous auction at the end of December, and was over-subscribedYields on the 10-year bonds dropped to 6.08%, down from 6.98% at the previous auction at the end of December, and was over-subscribed
The five-year bonds sold at an average yield of 5.39%, down from 6.47%, but the total sold – €3.6bn – was some way shy of the €4bn target.The five-year bonds sold at an average yield of 5.39%, down from 6.47%, but the total sold – €3.6bn – was some way shy of the €4bn target.
This follows a trend of successful bond auctions in 2012, after the €500bn of low-cost loans which commercial banks took from the European Central Bank in December.This follows a trend of successful bond auctions in 2012, after the €500bn of low-cost loans which commercial banks took from the European Central Bank in December.
Today's yields still put Italy firmly in the "worrying" camp – but there should be relief that they were below the 7% mark (where the "danger zone" is said to begin).Today's yields still put Italy firmly in the "worrying" camp – but there should be relief that they were below the 7% mark (where the "danger zone" is said to begin).
10.05am: A gimmer of hope this morning – eurozone business leaders and consumers are slightly more optimistic than a month ago.10.05am: A gimmer of hope this morning – eurozone business leaders and consumers are slightly more optimistic than a month ago.
The European commission reported that economic sentiment crept up to 93.4, as measured by its own business climate survey, up from 92.8 in December.The European commission reported that economic sentiment crept up to 93.4, as measured by its own business climate survey, up from 92.8 in December.
Consumer pessimism has dropped too – to -20.7 this month, from -21.3.Consumer pessimism has dropped too – to -20.7 this month, from -21.3.
Economic sentiment slid to a two-year low in December, following the events at the EU summit early that month. Today's data reflects the general sense of relief in January, a month in which shares have risen and most peripheral bond yields have fallen (with Portugal missing out).Economic sentiment slid to a two-year low in December, following the events at the EU summit early that month. Today's data reflects the general sense of relief in January, a month in which shares have risen and most peripheral bond yields have fallen (with Portugal missing out).
That mood could quickly darken, though, if today's summit goes badly or Greece's debt/bailout talks fail.That mood could quickly darken, though, if today's summit goes badly or Greece's debt/bailout talks fail.
UPDATE: Howard Archer of IHS Global Insight commented that:UPDATE: Howard Archer of IHS Global Insight commented that:

While this is a boost for hopes that eurozone economic activity may be stabilising, the fact remains that sentiment is still at a low level and the eurozone is far from out of the economic woods.
While this is a boost for hopes that eurozone economic activity may be stabilising, the fact remains that sentiment is still at a low level and the eurozone is far from out of the economic woods.
9.28am: There's widespread industrial action in Belgium this morning, as unions call a strike to mark today's summit meeting.9.28am: There's widespread industrial action in Belgium this morning, as unions call a strike to mark today's summit meeting.
The general strike -- Brussels' first in almost two decades - has forced the authorities to close down the country's rail networok, and left many trams and busses without drivers.The general strike -- Brussels' first in almost two decades - has forced the authorities to close down the country's rail networok, and left many trams and busses without drivers.
As this photo shows, the normally heaving train platforms were bereft of commuters this morning.As this photo shows, the normally heaving train platforms were bereft of commuters this morning.
Some international flights have been cancelled, while some bulk cargo terminals have been shuttered at the port of Antwerp.Some international flights have been cancelled, while some bulk cargo terminals have been shuttered at the port of Antwerp.
The strike is designed to signal opposition to Belgium's fiscal cutbacks. Philippe Dubois, a railway union member outside Brussels' Midi station, told Reuters that:The strike is designed to signal opposition to Belgium's fiscal cutbacks. Philippe Dubois, a railway union member outside Brussels' Midi station, told Reuters that:

We are angry because they want to attack our pensions. We want to make some noise.
We are angry because they want to attack our pensions. We want to make some noise.
9.12am: Now this is a little worrying -- the index which tracks volatility in Europe's financial markets has risen by almost 10% this morning.9.12am: Now this is a little worrying -- the index which tracks volatility in Europe's financial markets has risen by almost 10% this morning.
The Euro STOXX 50 volatility index, seen as Europe's yardstick of investor sentiment, jumped by 9.4% in early trading. That indicates that traders are more risk-averse (the higher the number, the greater the volatility).The Euro STOXX 50 volatility index, seen as Europe's yardstick of investor sentiment, jumped by 9.4% in early trading. That indicates that traders are more risk-averse (the higher the number, the greater the volatility).
Until today, the Euro STOXX 50 had been dropping steadily through January, reflecting hopes that the eurozone crisis was being resolved. At 26.6, the index is still rather low compared to the last few months – so not a reason to panic, more a sign of nervousness.Until today, the Euro STOXX 50 had been dropping steadily through January, reflecting hopes that the eurozone crisis was being resolved. At 26.6, the index is still rather low compared to the last few months – so not a reason to panic, more a sign of nervousness.
9.06am: Shares have fallen broadly in the first hour of trading in Europe, ahead of this afternoon's summit.9.06am: Shares have fallen broadly in the first hour of trading in Europe, ahead of this afternoon's summit.
The FTSE 100 has shed 49 points, or 0.87%, to 5683. Financial stocks are leading the fallers – with Barclays, Aviva, Lloyds Banking Group, RBS and Prudential all dropping by between 2% and 3%.The FTSE 100 has shed 49 points, or 0.87%, to 5683. Financial stocks are leading the fallers – with Barclays, Aviva, Lloyds Banking Group, RBS and Prudential all dropping by between 2% and 3%.
Spain's IBEX is the worst performer of the major indices, down 1.3% following the news that the Spanish economy shrank by 0.3% in the last quarter (see 8.13am)Spain's IBEX is the worst performer of the major indices, down 1.3% following the news that the Spanish economy shrank by 0.3% in the last quarter (see 8.13am)
9.03am: Portuguese borrowing costs have hit all-time highs this morning, as fears grow that it will need a second bailout.9.03am: Portuguese borrowing costs have hit all-time highs this morning, as fears grow that it will need a second bailout.
As Bloomberg's Linda Yueh swiftly tweeted, the yield (or interest rate) on Portugal's 10-year bonds is approaching 16% – twice the level seen as sustainable.As Bloomberg's Linda Yueh swiftly tweeted, the yield (or interest rate) on Portugal's 10-year bonds is approaching 16% – twice the level seen as sustainable.
#Portugal bond yields hit new #euro era record highs at open: 10YR 15.8%, 5YR 20.8%#Portugal bond yields hit new #euro era record highs at open: 10YR 15.8%, 5YR 20.8%
— Linda Yueh (@lindayueh) January 30, 2012— Linda Yueh (@lindayueh) January 30, 2012
8.42am: Yanis Varoufakis, who runs the Department of Economic Policy at the University of Athens, has rubbished the idea that austerity will help Greece to return to growth.8.42am: Yanis Varoufakis, who runs the Department of Economic Policy at the University of Athens, has rubbished the idea that austerity will help Greece to return to growth.
Varoufakis told Radio 4's Today programme that the plan wouldn't work:Varoufakis told Radio 4's Today programme that the plan wouldn't work:

Even if God and his angels were to descend upon Athens and put them in place.
Even if God and his angels were to descend upon Athens and put them in place.
Gabriel, Michael & Raphael would, at least, make a more impressive trio than the Troika who Athenians have grown used to seeing.Gabriel, Michael & Raphael would, at least, make a more impressive trio than the Troika who Athenians have grown used to seeing.
8.26am: If you missed Lucas Papademos's warning last night, here's how the Greek PM described the importance of agreeing a new package of financial support:8.26am: If you missed Lucas Papademos's warning last night, here's how the Greek PM described the importance of agreeing a new package of financial support:
If this process isn't successfully concluded then we face the spectre of bankruptcy with all the dire consequences for society that entails.If this process isn't successfully concluded then we face the spectre of bankruptcy with all the dire consequences for society that entails.
Papademos released the statement after meeting with the leaders of Greece's three largest political parties. He said they were all in "complete agreement" with the government on continuing talks with private and international creditors.Papademos released the statement after meeting with the leaders of Greece's three largest political parties. He said they were all in "complete agreement" with the government on continuing talks with private and international creditors.
8.13am: It's official - Spain's economy is shrinking.8.13am: It's official - Spain's economy is shrinking.
Data released in the last few minutes showed that Spanish GDP fell by 0.3% in the last three months of 2011, compared with the previous quarter. That's the first contraction in eight quarters.Data released in the last few minutes showed that Spanish GDP fell by 0.3% in the last three months of 2011, compared with the previous quarter. That's the first contraction in eight quarters.
On an annual basis, Spanish GDP increased by just 0.3% over the year. That's one of the weakest performances in Europe, underlining the challenge faced by its new government.On an annual basis, Spanish GDP increased by just 0.3% over the year. That's one of the weakest performances in Europe, underlining the challenge faced by its new government.
It's the second blow to hit Spain in recent days – last Friday, unemployment smashed through the five-million mark, putting the jobless rate at 22.8%. More than half of 16-24 year-old Spaniards are out of work.It's the second blow to hit Spain in recent days – last Friday, unemployment smashed through the five-million mark, putting the jobless rate at 22.8%. More than half of 16-24 year-old Spaniards are out of work.
Confirmation that Spain is shrinking could give prime minister Mariano Rajoy more ammunition in his negotiations with the EU. Our Madrid correspondent Giles Tremlett reported on Friday that Rajoy is urging Europe to relax Spain's deficit reduction targets.Confirmation that Spain is shrinking could give prime minister Mariano Rajoy more ammunition in his negotiations with the EU. Our Madrid correspondent Giles Tremlett reported on Friday that Rajoy is urging Europe to relax Spain's deficit reduction targets.
7.55am: Here's today's agenda:7.55am: Here's today's agenda:
• Spanish GDP released: 8am GMT / 9am CET
• Italy auctions €6bn of five and 10-year bonds - from 10am / 11am CET
• Eurozone consumer confidence for January released - 10am / 11am CET
• EU leaders begin summit talks in Brussels - 2pm GMT / 3pm CET		• Spanish GDP released: 8am GMT / 9am CET
• Italy auctions €6bn of five and 10-year bonds - from 10am / 11am CET
• Eurozone consumer confidence for January released - 10am / 11am CET
• EU leaders begin summit talks in Brussels - 2pm GMT / 3pm CET
7.45am: Good morning, and welcome to another day of live coverage of the European financial crisis.7.45am: Good morning, and welcome to another day of live coverage of the European financial crisis.
EU leaders are heading towards Brussels today for their first summit meeting of 2012. On the to-do list: discussing ways of catalysing economic recovery in Europe, and signing off two new treaties -- creating the fiscal compact that will tie eurozone members to tougher budget rules, and establishing the European Stability Mechanism, Europe's new bailout vehicle.EU leaders are heading towards Brussels today for their first summit meeting of 2012. On the to-do list: discussing ways of catalysing economic recovery in Europe, and signing off two new treaties -- creating the fiscal compact that will tie eurozone members to tougher budget rules, and establishing the European Stability Mechanism, Europe's new bailout vehicle.
Overshadowing the summit, though, is Greece. Although the deal with its creditors is (we hear) close to being finalised, there is growing concern that the country's second bailout needs to be increased. Can eurozone governments be persuaded to put their hands into their pockets again?Overshadowing the summit, though, is Greece. Although the deal with its creditors is (we hear) close to being finalised, there is growing concern that the country's second bailout needs to be increased. Can eurozone governments be persuaded to put their hands into their pockets again?
The stakes are high -- prime minister Lucas Papademos warned last night that Greece was on the brink of disaster, and would plunge into bankruptcy unless the country's international backers agreed to a new bail-out.The stakes are high -- prime minister Lucas Papademos warned last night that Greece was on the brink of disaster, and would plunge into bankruptcy unless the country's international backers agreed to a new bail-out.
Italy will also be under strutiny -- it aims to sell up to €6bn of long-term debt today. Will investors show faith in Mario Monti?Italy will also be under strutiny -- it aims to sell up to €6bn of long-term debt today. Will investors show faith in Mario Monti?